Super comeback: Money lost in horror year is back

Jeff Whalley | Herald Sun | February 21, 2012

http://www.news.com.au/money/superannuation/fund-profits-cover-a-bad-year-after-gfc/story-e6frfmdi-1226276911373

 

The average Australian superannuation fund has already recovered the losses sustained last year during the horror spell for global share markets.

 

The median balanced fund - the fund held by most Australians - increased 2.3 per cent in January, according to research by research house SuperRatings.

 

And the strong performance has continued this month, with the median estimated to have climbed another 0.9 per cent.

 

Cracks started appearing in the average Aussie's retirement nest egg last year with an average decline of 1.5 per cent in 2011 - the first drop since the global financial crises.

 

SuperRatings managing director Jeff Bresnahan said it was a "welcome relief" to see markets driven higher by the European Central Bank's liquidity boost and US economic improvements.

 

The group's report shows that $100,000 invested in median balanced account will have jumped to almost $160,000 in the past 10 years.

 

Mr Bresnahan nonetheless warned against expecting a surge in super account balances this year.

 

Europe was still facing significant growth and debt issues and super funds would continue to face headwinds for the rest of the year.

 

But there could be overall growth for the year.

 

"While not ignoring considerable downside risks, the recovery in sentiment and a greater focus on fundamentals is noticeable and has been building gradually," he said.

 

"More recently, Chinese economic data suggests the country may avoid a much-feared hard landing.

 

"Given that the majority of super funds only hedge up to 50 per cent of their international shares exposure, the 4.1 per cent rise by the Australian dollar held back the gains for the median International Shares option, returning only 2.4 per cent," he said.