AUSTRALIA - Superannuation funds saw a median performance of 1.3% in the first quarter of 2005, slowed by rising interest rates and oil prices, according to Intech Investment Consultants.
This figure represents a drop from fourth quarter 2004 returns of 5.9%. As a result, investors should not expect superannuation funds to post the same strong returns that have seen in the past couple of years, said Hugh Dougherty, head of research at Intech.
“Financial markets rarely move in a straight upward line for extended periods and we are likely now entering a period of more subdued investment return outcomes,” Dougherty said.
“Indeed, it would appear that the March 2005 quarter marked a subtle shift in the drivers of investment returns with 'risk' assets - emerging markets, corporate bonds and small caps - tending to underperform the 'higher quality' assets during the quarter.
Out of Intech’s survey of 188 superannuation funds, MTAA Growth posted a return of 3.4%, MTAA balanced returned 2.8% and ESI Super Growth saw 2.4%, the three highest returns.
The positive returns in the first nine months of the Australian financial year, which closes at the end of June, means that overall superannuation performance will have year-end returns that are “slightly above reasonable long-term expectations for members,” Dougherty said.
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