The final quarter of calendar year 2018 started in horrible fashion for Australia's superannuation funds as about $22 billion was wiped from MySuper returns since January. However, some funds were able to manage the downside well.
Recording this is the SelectingSuper MySuper/Default index, which fell 3.2% in October and lost all its gains since January 2018.
Rainmaker Information, the research house behind SelectingSuper, noted October's fall might not be a significant event on the surface, but if markets don't pull out of correction mode it could mean a substantial hit to members' account balances this financial year.
Rainmaker senior research analyst Pooja Antil said even though recent Rainmaker research showed no meaningful systematic relationship between fund returns and their growth asset weighting, the October analysis shows super funds with a more conservative approach to investments managed the downside risk better. And there were some new names at the top of the MySuper/Default performance tables when it mattered.
In the 12 months to 31 October 2018, the First Super Employer - Balanced option came out on top, returning 8.1%. Next was Media Super - Balanced and Statewide Super - MySuper, both returning 6%, while NGS Super - Diversified (MySuper) and Hostplus - Balanced returned 5.9% respectively.
Rainmaker's analysis shows October's stock market performance reduced one-year super fund returns by two thirds to 3.8% per annum down from 9.7% as at the end of September.
"The October average return for super products with less than 60% of growth assets was -2.3% as opposed to products with 80% or above growth assets returning -4.2%," Antil said.
While non-profit MySuper products earned -2.9%, retail MySuper products reported returns of -4%. This retail under-performance happened regardless of the growth asset weighting, Antil noted.
The average October return for single investment strategy MySuper products was -3.02%. For lifecycle products the comparative average was -4.2%, meaning lifecycle products underperformed by 118 basis points, however this varied by age cohorts.