Superannuation funds were slightly down in April, by a negligible 0.1 percent, following the mixed performance of global share markets due to the Greek sovereign debt crisis.
April started off strongly for superannuation funds, but then markets retreated due to the concerns over Greek sovereign debt and the possible Greek ‘contagion’ spreading to other economies. The Australian share market was down 1.3 percent for the month, while international shares were up slightly (0.3 percent) in hedged terms but down (1.4 percent) unhedged due to the increase in value of the Australian dollar.
Chant West principal, Warren Chant believes the global economy is yet to fully recover from the global financial crisis.
“There are signs that the global financial crisis has still not played out fully. Markets were generally flat in April, but already in May we’ve seen more nervousness and some very extreme movements. Nevertheless, at the end of April growth funds were up a healthy 14.8 percent for the financial year to date, and members are still certain to see the first positive financial year return since 2006/07. It’s just that the positive number may not be as strong as it was looking back in March.” Mr Chant said.
Industry Super Funds did well overall during April, with industry funds having a lower exposure to listed share and property markets, as a result industry funds outperformed their master trusts for only the third time in the past 14 months.
Warren Chant expects this pattern of industry funds outperforming master trusts during times when listed assets perform badly will not continue indefinitely as master trusts shift more of their capital into unlisted assets.
“Firstly, we are seeing the unlisted investments that industry funds have favoured (that is, unlisted infrastructure, unlisted property and private equity), starting to produce positive returns again after being valued downwards for the larger part of 2009. That means industry funds won’t necessarily fall behind when listed markets move up.” Mr Chant said.
“Secondly, some master trusts are following the industry fund lead and increasing their exposures to unlisted assets. However, master trusts still tend to prefer the liquidity of listed markets, so we don’t expect them to go too far down that route.”