How did Australian super funds fare in April after steep falls in March?

Australian superannuation funds bounced back in April, delivering a solid 2.6% return for the month according to Chant West, as markets around the world returned to growth.

Welcome reprieve

The industry analyst said that the boost in April went a decent way to recouping the 3.2% lost by funds in March, with the figures calculated for funds with 61-80% of their allocation in growth assets.

Chant West said further:

With international markets also up in May so far, Chant West estimates that with just six weeks remaining in FY26, the median growth fund return is sitting at 6.4%. This follows three consecutive years of very strong performance – 9.2% in FY23, 9.1% in FY24 and 10.4% in FY25.

Chant West Head of Superannuation Investment Research Mano Mohankumar said the April share market rally was driven by the ceasefire in the Middle East and solid corporate earnings in the US.

He added:

Over the month, developed market international shares returned a lofty 9% in hedged terms, led by the technology and communications services sectors amid ongoing investor enthusiasm for AI. With the Australian dollar appreciating against most major currencies, the return in unhedged terms was more modest, but still healthy at 4.4%. Emerging markets shares performed even better, gaining 9.3% in unhedged terms. While not reaching the same heights, Australian shares still generated a solid gain of 2.3%. With the risk-on sentiment, returns from bonds were flat with Australian and international bonds up 0.1% and 0.3%, respectively.

Mr Mohankumar said the turbulence in markets over the past couple of months was a timely reminder that superannuation is a long-term investment.

Members who panicked in March and switched to cash or a lower risk diversified option, not only turned paper losses into real ones, but also missed out on the subsequent market rebound. Missing even short periods of strong returns can have a significant impact on retirement outcomes due to the power of compounding.

Chant West figures show that for the financial year to date, all growth asset allocations have returned 7.5%, high growth have returned 6.5% and growth have returned 6%.

Balanced funds have returned 4.8% and conservative allocations have returned 3.6%.

Long-term results are solid

Mr Mohankumar said since the introduction of compulsory super in 1992 the media growth fund had returned 8% per annum.

The annual CPI increase over the same period is 2.7%, giving a real return of 5.3% p.a. – well above the typical 3.5% target. Even looking at the past 20 years, which includes three major share market downturns – the GFC in 2007-2009, COVID-19 in 2020, and the high inflation and rising interest rates in 2022 – super funds have returned 6.6% p.a., which is still ahead of the typical objective.

The post How did Australian super funds fare in April after steep falls in March? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.