Default superannuation funds back on the up: Heron

Chris Butler, Managing Director of The Heron Partnership, said that super investors will welcome a return to growth. “The numbers are encouraging and reflect the significant improvement in equity markets, particularly Australian shares, during the last six months.”

“Although negative returns are expected for the typical default investment option for the September year we anticipate it will be materially better than the year ending September 2008.” 

Mr Butler said, “The return for the average Balanced/Growth investment option included in our superannuation survey for the 12 months ending September 2008 was -13.6%. For the 12 months ending September 2009 the returns are expected to be around -2% to -4%.  Indeed some funds should be closer to a positive number, depending on their asset mix and underlying manager construction.”

“While this is a long way off the positive returns of 13.8% and 11.4% for the years ending September 2007 and 2006 respectively, it shows that the market rally of 2009 has made some ground in cushioning the blow from the financial crisis.”

“Assuming there is no major downturn in equity markets for the balance of this month we would expect most default options for the 12 months to the end of October to be positive.  This is because the negative number for October last year of around -7% falls out of the 12 month number.”

Heron classifies investment options with a 65% to 79% weighting to growth assets as Balanced/Growth.  Most fund “default” investment options fall within the 65% - 79% growth assets range.