Super members on track for loss in 2018

The Australian

Samantha Bailey, Business Reporter

18 December 2018

Super members are on track for their first annual loss in seven years, following two
months of declines as market volatility continues to test global markets.

According to superannuation research company SuperRatings, super members
invested in the median balanced option made a negative return of 0.6 per cent in
November, following a 3.1 per cent decline in October.

Ongoing market weakness in December is likely to erode what’s left of the gains held
in median balanced funds by the end of the calendar year, which at the moment are
sitting on a return of about 1.8 per cent, SuperRatings said.

That is before investment fees, tax and implicit asset-based administration fees.
Super members who are only exposed to Australian equities suffered a worse decline
in November of 2.4 per cent, pushing them into negative territory for the year to date.

The local sharemarket is currently down almost 10 per cent for the December quarter,
in what is shaping up to be the worst December quarter since 2008.
The benchmark S&P/ASX 200 is currently down 7.8 per cent for the 2018 calendar

Recent declines come on the back of concerns about slower global growth, which have
rocked already jittery markets.

Globally, markets were already volatile amid simmering trade tensions between China
and the US intensified after the CFO of Chinese telco giant Huawei was arrested
earlier this month at the request of the US government for alleged violations of Iranian

The last time super members experienced an annual loss was in 2011 when the median
balanced option returned a negative 1.9 per cent.
Super members with exposure to only Australian equities suffered declines of 9.6 per
cent that year.

SuperRatings estimates that between 60 and 70 per cent of Australians with their super
held in a major fund are invested in the default investment option, which in most cases
is the balanced investment option.

“Heading into 2019, it looks like members will need to get used to some of the
volatility we’ve seen in markets over the past two or three months,” said SuperRatings
executive director Kirby Rappell. “This is certainly a challenging environment for super funds at the moment.
“Share markets are under pressure globally, and recent data indicate that the economy
is weaker than expected, with downside risks including a softening housing market
having a real impact on confidence.”

Still, SuperRatings said members remain ahead over a 10-year period, with $100,000
invested in the median balanced option in November 2008 now worth $206,366.

Despite a volatile 2018, $100,000 invested in the median Australian Shares option in
2008 is now worth $230,482.

At about 11.15am (AEDT), the ASX 200 was trading down 1.2 per cent.

Samantha Bailey, Business Reporter