Positive returns for super

While it's been a volatile couple of months for investors, the Australian sharemarket delivered its first positive financial year return since 2006-2007 with the S&P/ASX 200 Index returning 8.8%. 

Balanced funds are also on track to deliver positive returns with SuperRatings estimating that the median balanced investment option will return 9.6%. While the return is more moderate than the double digit returns achieved between 2004 and 2007, it sits above the median annual return of 6.8% snce the Super Guarantee was introduced in 1992.  

While many balanced investors would have been tempted to switch to cash options during the extreme volatility of the GFC, history has proved that staying exposed to growth assets is a more durable strategy. 

SuperRatings managing director Jeff Bresnahan said: "It would be good if most people with super, particularly those under 50 years of age, could simply stick their head in the sand and pull it out about 5 years away from retirement. Market volatility is an ongoing reality, but growth style assets will continue to outperform cash investments over the medium to long term." 

Diversification has proved to be a saving grace for many investors. SuperRatings data shows that a $100,000 investment in an international share option on 1 January 2000 would have fallen to $76,606 while the same amount invested in Australian shares would have grown to $220,516 by 30 June 2010. By contrast, investing the same amount over the same timeframe in a balanced investment option would have grown to $164,461 while a cash option would have yielded $156,855.   

While sharemarkets are likely to remain volatile in the near term, super fund members will be able to console themselves with a return to black rather than red.  

The above article has been sourced from Vanguard Investments Australia Ltd.

Important Information

The above information provides an overview or summary only and it shouldn’t be considered a comprehensive statement on any matter or relied upon as such. The above information doesn’t take into account your personal objectives, financial situation or needs. It’s important for you to consider these matters before making any financial decision and I recommend you seek help from a financial adviser.