Not all equal
Some funds, of course, did better than others, with the best performing balanced fund gaining 3.3 per cent and the worst performing balanced fund losing 5.5 per cent. Performance is not the sole consideration when choosing a super fund. However, it pays for members to do their homework when selecting a super fund and investment strategy, as it can end up making a large difference to the size of an accumulated nest egg, invested over 40 years or so. As Figure 1 shows, 2011 was the first calendar year of negative performance since a horrendous 2008, in what has otherwise been a good set of numbers over the past 10 years, with seven out of 10 years of strong returns.
Shares the main drag
Australian shares (which on average account for just over 30 per cent of assets in a balanced fund) were the main drag on super fund performance in 2011, with the S&P/ASX 300 Accumulation Index falling
11 per cent for the year. However, on a positive note, it was good to see that super funds in this asset class did better than the market on average, with the median Australian share option recording a return of minus 9.6 per cent, after fees and taxes.
As expected, conservative options fared best in 2011, with the median capital stable fund returning three per cent. With a weighting to growth assets of only 20 to 40 per cent, capital stable funds clearly benefited from significant exposure to bonds – the best performing asset class in 2011. The median diversified fixed interest option returned 7.7 per cent, while major bond indices recorded double-digit returns, as investors sought the relative safety of US, German and Australian government bonds throughout the year. In particular, demand from Australian government bonds drove the 10-year Australian government bond yield down to historical lows.
