HAVING taken an absolute hammering for the previous two years, the last financial year was about rebuilding for super funds. Despite losing 5% in the last two months of the financial year period according to initial data released by SuperRatings, super funds which used a balanced investment strategy (exposure to growth-style assets between 60%-76%) returned 9.6%, on a median fund.

That’s well above the 6.4% loss suffered in the 2008 financial year and the whopping 12.9% loss suffered in the 2009 financial year. While these two years show the impact a global financial crisis can have on your super fund, SuperRatings’ Managing Director Jeff Bresnahan said the direction for balanced super funds since compulsory superannuation was brought in was an overwhelmingly positive one.

“This whole Global Financial Crisis has really tested the Australian superannuation system and whilst there has been much temptation by consumers to try and take control of their own super, mainstream super funds have demonstrated that diversified portfolios do protect members from catastrophic losses and provide genuine upside over the long term.” he said.

The data also shows a positive long-term trend for balanced super funds, which have grown despite a couple of bumps along the way.

Since 1992, the median average for super returns has been 6.8%, even taking into account the lean years just after the millennium, and the Global Financial Crisis. That’s about 4.2% above the rate of inflation, which is estimated to have sat around 2.6% over the same period.

However, the data released by SuperRatings also doesn’t show too much of a difference between an investment in cash and a balanced fund. An investment of $100,000 in a balanced fund at the start of 2000 would have grown that figure to $164,461 median, but that’s only about $8000 above a cash fund, which SuperRatings estimates would have returned $156, 855 on the same investment.

Coupled with market volatility which has seen negative or flat returns for four out of last ten years, many people see a self managed fund as an attractive option over a balanced fund.

Bresnahan puts many peoples’ concerns into perspective “What we are witnessing via this Global Financial Crisis looks like it is yet to play out fully and the greed of some financial institutions has been responsible for most of the ongoing issues world economies are currently working through” he said.

Even though there is a bleak outlook for the future, Bresnahan says looking at the historical picture should allay fears of those with their money in managed super funds. He says that consumers who have ran to cash when markets are low or volatile have more often than not made a loss when they tried to switch back to investments when times were good lost out in the end.

“Market volatility is an ongoing reality, but growth style assets will continue to outperform cash investments over the medium to long term.” he said.

The data released by SuperRatings also painted a bleak picture for those who went it alone and invested in international shares. A $100,000 investment made in 2000 would have actually lost you about a quarter of your original investment over ten years, whereas home-grown shares have outperformed balanced funds and would have seen a return of a whopping 120% to $220, 516.

Full year results are expected at the end of this month, when complex tax calculations are undertaken for many funds.

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