Post-election share rally not enough for super funds

While a post-election bounce in Australian shares and property helped superannuation returns a little in May, the re-emergence of geopolitical uncertainty and a tendency to risk aversion globally left the typical balanced option with negative returns for the month.

According to SuperRatings, the option returned -0.7 per cent for May, as a financial year that has been forgettable at best for super fund performance drew to an end.

The research house warned that while markets had recovered since last month’s weakness, members still shouldn’t expect a strong end to FY19. The year-to-date return for the median balanced option was still well below that 10-year average of 8.5 per cent, currently sitting at just 5.1 per cent.

May was particularly bad for members in growth and international shares options, with the median offerings for both falling 1.2 and 4.0 per cent respectively. Australian shares options fared better with a performance of 1.4 per cent, reflecting the market’s positive response to Prime Minister Scott Morrison’s shock election win.

“Labor’s negative gearing proposals were thought to favour developers by limiting tax concessions to new stock, but so far the improvement in sentiment has outweighed any negative impact, which may give some super funds a temporary boost to their property portfolios,” SuperRatings executive director, Kirby Rappell, said of the domestic stock market’s rally.

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