Super fund returns improve in April, full-year returns look weak

The average Australian superannuation fund grew by 2.23% in April thanks to a turnaround in global sharemarkets.

But the chief executive of SuperRatings, Jeff Bresnahan, says many funds will struggle to post positive returns for the 2007-08 financial year. In the last 12 months, the average balanced super fund returned -2.88%.

While further sharemarket gains in May have pushed returns for the full year back towards positive territory, Bresnahan says today’s market slump – down almost 1% in morning trade – means there will be some disappointed investors come 1 July. “The majority of funds are still in the red and the weakness in the market is going to make it that little bit harder to sneak back into the black.”

Investors shouldn’t be panicking too much, given three-year and five-year returns for the average fund remain safely above 10% a year. But Bresnahan says an investor unhappy with their return this year should take some time to review their risk profile and examine their super strategy. “Everyone’s got a different risk profile when they actually sit down and review it.”