Super funds' worst performance in 20 years

The study estimated the median balanced super fund, a category representing more than 80% of Australians' superannuation, would produce a loss of 6.4% for the year.

The study estimated, of the major investment options generally used by Australians in their super funds, only the cash and capital stable style options would produce a slightly positive result.

Jeff Bresnahan, managing director, Super ratings, commented: "There is no cause of alarm at these negative results and for a balanced option a negative return can be expected on average once every six years by investors."

Andrew Boal, managing director, Watson Wyatt in Australia, said this was the first time super fund losses had occurred in an environment of full Super Choice.

Boal commented on the possibility of super fund members leaving their funds in favour of another: "Getting out of your loss-making super fund and chasing the best-performed alternative is often a recipe for losing even more money."

He added: "Investors can change super funds, but whether they ought to do so is a very different question. Sometimes the wisest choice is not to do anything."

Boal concluded that trustees should help their members understand that even over ten-year periods relative investment performance could vary significantly depending on the underlying asset allocation of the various investment options.

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• Topics
• Australia
• Hedge Funds