Super fund returns improve in March

21-Apr-2017

By Ra’Eesah Lillah

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Superannuation fund returns reached a high in March, with improving economic fundamentals contributing to stronger performance in global markets. However investors were warned that the remainder of the year may not be all smooth sailing, according to SuperRatings.

The firm’s latest data revealed that the median balanced fund posted a return of 1.5 per cent in March, and returned 2.5 per cent over the first quarter of 2017.

SuperRatings chairman Jeff Bresnahan said the month had marked a turning point for the market as investors were unsure whether the promised “reflation” under a Trump presidency would come to pass.

“The rotation into equities has been a consistent theme since October last year, with yields moving off historic lows and shares pushing ever higher,” he said.

Despite the hit the US currency took, domestically Australia’s trade surplus remained solid which expanded manufacturing activity, Bresnahan said.

“The main threats to fundamentals come from the interrelated issues of low wage growth and rising house prices, especially in the Melbourne and Sydney markets,” he said.

A higher service price has boosted Australia’s national income; this came as the global financial circumstances gradually improved late last year, although there is still a notable disparity in employment outcomes.

“The RBA has noted that households do not appear to be under stress because of repayments, but we may be due for a correction in these markets,” he pointed out.

The Australian market saw returns of 3.3 per cent in March with all sectors gaining, while global yields ended on a low despite peaking early in the month.

Long- term returns have nearly met inflation targets for March even though they were still being affected by the decade old global financial crisis, Bresnahan said.

“In short, the marker is not convinced that shares will keep rising in perpetuity,” he pointed out.

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