COVID-19’s impact on super funds not as bad as GFC
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Superannuation returns have taken a hit this year but the impact hasn’t been as severe as the GFC, and some funds actually performed positively in April.
The rise of major market indexes throughout the fourth month of 2020, such as the ASX’s 9 per cent gain, took returns to +2.2 per cent.
This figure was based on a survey of 100 MySuper products.
Three of these products are still up on a 12-month basis, with the highest gain being 2.2 per cent. And the extent of the losses was a -7.6 per cent drop.
Returns for this financial year are still in the negative since COVID-19 hit, but the impact has been less severe than the GFC.
The average return since February 20 is -10.4 per cent, but this is only half the extreme reached during the GFC.
“Results so far during the Corona Financial Crisis (CFC) are nowhere near as deep,” Alex Dunnin, executive director at intelligence firm Rainmaker Information, said.
“At face value super funds have fallen less than half as much as the ASX.
“While this is a scary story for super fund members, it’s also a good story because it shows how their fund’s investment strategies have insulated them from the worst of the share market falls.”
Rainmaker Information also found that environmental, social and governance (ESG) funds withstood the onslaught of COVID-19 better than non-ESG funds.
Australian Ethical Investment (ASX:AEF) is one of a few products to deliver a positive return in 12 months, Dunnin noted.
Among personal funds, four of the top five performers were ESG-focused.
Dunnin said an “ESG effect” over the quarter would have added 1 per cent to members’ returns.