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‘Streak in jeopardy’: Super funds on track for first negative year since 2009

Chant West senior investment research manager, Mano Mohankumar, said negative returns appeared probable for the typical growth fund this financial year, for the first time since 2009.”It’s not certain that it’s going to be in negative territory – we don’t know what’s going to happen over the next six weeks – but it’s heading that way,” Mr Mohankumar said. “That streak is in jeopardy.”

KPMG national sector leader for asset and wealth management, Linda Elkins, said lower returns would have the greatest effects on people who planned to retire soon, or those in retirement. Ms Elkins said people nearing retirement should seek financial advice, but could potentially consider strategies including working longer, or making extra contributions.

“The issues are complex and no one size fits all, but I would say the people that I worry about are those close to retirement or in retirement,” said Ms Elkins, previously an executive general manager of super giant Colonial First State.

Chant West defines “growth” funds as those with a 61 per cent to 80 per cent allocation to “growth” assets, including Australian and global shares.

SuperRatings has also predicted 2019-20 returns could be negative, but said it will be milder than the hit members took in the global financial crisis.


The trends follow a period of volatility on global share markets. The S&P/ASX 200 index closed 1 per cent higher on Monday at 5460.5. The local benchmark has bounced 17 per cent from its lows in March but remains 23 per cent below its pre crisis highs.

Mr Mohankumar pointed to data showing there had been only three financial years of negative returns for the super sector since 1993, and said the typical median growth fund had returned 7.9 per cent a year over this period.

Alongside the hit from falling sharemarkets, super funds have also recently been rocked by the government’s scheme allowing struggling workers to withdraw up to $20,000 from their super.

Atlas Funds Management chief investment officer Hugh Dive said the early withdrawal scheme could drag on returns of some funds that receive a large number of early redemption requests. Funds that have large exposures to unlisted assets, which are harder to sell, could be particularly affected, he said.”You cannot keep just selling your illiquids. Eventually you’ve got to start making some hard decisions on your illiquid assets and mark those down to generate cash.”

The funds with the highest number of applications for early withdrawals were AustralianSuper, HOSTPLUS, Sunsuper, REST, CBus, and BT. The average amount paid out under the scheme was $7,546, according to the APRA data.

Ms Elkins said she did not think the early access scheme would affect most large funds’ returns, because the funds would re-balance their asset allocation as they paid out redemptions.

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