Australian super returns dip amid equity struggles
Australian superannuation returns weakened in September, as the median balanced accumulation option recorded a drop of 0.4%. This downturn aligns with broader market conditions, according to SuperRatings, which monitors industry performance. The data highlights how local equities struggled during the month.
The Australian share market fell more than 3% in September, pressured by ongoing inflation and another increase in interest rates by the Reserve Bank of Australia. SuperRatings identified the poor performance of domestic equities as the main reason for the estimated decline in returns. Meanwhile, the US market held steady, with gains in artificial intelligence and technology stocks counterbalancing other losses.
Three main investment categories experienced losses: the median growth accumulation option declined by 0.5%, while the capital stable option fell by 0.4%. Despite these setbacks, all three categories remained in positive territory for the financial year ending 30 September. The balanced option grew by 0.7%, and the growth option rose by 0.9%, whereas the capital stable option showed no change over the same period.
Pension funds also faced losses in September, with the median balanced, growth, and capital stable options each decreasing by 0.5%. Over the full financial year, however, the median balanced pension option still achieved a gain of 0.6%, and growth options climbed by 1.0%. Only the capital stable option saw a minor reduction, falling by 0.1%.
Over longer horizons, returns remained robust. The median balanced option delivered 5.9% over the past year and 7.4% annually over the last decade.
Kirby Rappell, director of SuperRatings, emphasized that short-term fluctuations are expected in superannuation investments. He stressed that diversification across different asset classes and regions helps stabilize returns over time. Since the low point of the 2009 financial crisis, median balanced options have averaged an annual return of 7.8%.
