AUSTRALIA - Australian superannuation funds are poised to deliver the strongest returns in almost a decade on the back of strong returns from Australian growth assets, says investment consultant Intech.
The firm said its analysis showed the median growth-oriented super fund was likely to return about 15.9% for 2004, which would make it the best calendar year return since 1995.
Commenting on the analysis, Andrew Korbel, Intech senior consultant said: “In 2002, super funds had their worst year in a quarter of a century.
“Last year there was a return to normality, with a return of around 8%, broadly in line with the long-term average expected returns from this type of strategy.
“In 2004, virtually everything went right for super funds, with all asset classes exceeding cash returns and major growth asset sectors earning multiples of the cash rate making it a stellar year for super funds.”
He added: “With the recent strength of Australian returns, some have been questioning the merits of funds’ strategies of diversifying their investments offshore. It cannot be denied that, had the typical growth fund been invested solely in Australian shares rather than the approximate average allocation of 20% to international shares, its returns would be around 3% per annum better over the past 5 years.
“Diversification is more about providing stable returns over the long-term rather than any given year and safe-guarding against the risks specific to Australian stocks and the Australian market. If it was all about maximising returns in a given year, then investors could have done better… by investing in Belgium (which outperformed Australia by 8% as measured by MSCI) or by only investing in Australian Energy stocks which were up 44%.”
Standard Life has increased exposure to risk assets in three out of five funds in its Active Plus and Passive Plus workplace pension ranges.
Some 48% of employers are unaware of the services or help they offer to members of their defined contribution (DC) schemes, according to Aon.
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