AUSTRALIA - The median superannuation growth fund returned just 4.7% in 2010 following a downbeat first half, research by Chant West shows.
Funds bounced back in the second half of the year, returning 7.3% from July to December after figures of -2.2% for the first six months, the consultant said.
Australian shares returned 3.8% in December, with international shares returning 5.7% in hedged terms but only 0.3% in unhedged terms, due to the sharp appreciation of the Australian dollar. Australian and international REITs advanced 1.2% and 5.2% respectively over the month, said the firm.
Chant West director, Warren Chant said: "2010 was a topsy-turvy year with no distinct pattern, and in the end the median fund posted six positive months and six negative months. But at least the full year result was positive in absolute terms and in real terms, i.e. it was ahead of inflation. And the year finished on a high, with a strong 1.8% gain in December.
"Investors appear to be growing in confidence, especially as there has been no further escalation of debt issues in Europe - at least for the moment. There have also been some positive economic indicators out of the US, suggesting that the economic recovery may be gaining momentum. The Australian economy has remained relatively strong, and this has been reflected in our share market. There will of course be an economic effect from the floods in the eastern states, and it remains to be seen what that will mean for growth, inflation and interest rates."
Funds also achieved their risk and return objectives over the long term, added Chant. "If we look at the median performance over 15 financial years, we can see that funds have achieved those objectives. The annualised return over that period was 6.9%. The annual CPI increase over the period was 2.6%, so the outperformance averaged 4.3% per annum. And there were two negative years out of 15, so the risk objective was also met."
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