Superannuation funds have recorded their biggest ever annual loss since superannuation was made compulsory 26 years ago.
Superannuation research group SuperRatings says the median super fund lost 6.4 per cent for the year to the end of June.
Some super funds lost as much as 16 per cent.
THIS DATA IS FROM NOV 2007 results - The high-performing Telstra Super Fund is the only non-industry fund among the finalists.
Significantly, all but one of the industry funds on SuperRatings’ short-list for fund of the year is open to the public. These are AGEST, AustralianSuper, CARE, HESTA, HOSTPLUS, MTAA, REST and Sunsuper.
On performance terms alone, industry funds dominate their retail rivals. In the 12 months to 30 September (the latest figures available), eight of the top 10 performers for their balanced portfolios were industry funds, according to SuperRatings, led by Catholic Super with 19.6% followed by MTAA Super with 19.1
Telstra Super was the only corporate fund among the top 10 performers with a return of 18% for the 12 months to September. And AMP CustomSuper-Balanced Growth was the only retail fund in this select group, with a return of 17.1%.
(SuperRatings classifies a balanced fund as one with 60–75% of its assets in growth investments, the most common examples being shares and property, with the remainder in such investments as bonds and cash.)
“The reality is that over the past five to seven years, industry funds have outperformed retail funds,” says Jeff Bresnahan, managing director of SuperRatings. This out-performance doesn’t even count their outstanding fee advantage over the vast majority of retail funds.
And once the fee advantage of industry funds is included in the calculations, the returns of most retail funds have lagged way behind most industry funds.
SuperRatings managing director Jeff Bresnahan says it is bad news for people soon to retire, but it has been preceded by four strong years of double-digit returns.
"Balanced funds have a negative return about once every six years, so if you put it into perspective, the last five years has averaged out at about 1 per cent per annum positive return," he said.
"In perspective, it's not such a bad result. The problem is right now we've got extreme volatility in markets and no one really knows which way it's going to move next."
Analysts are questioning how many more big write-downs are to come after ANZ became the latest bank to announce a major loss because of its exposure to volatile credit markets.
Today ANZ increased its provisions to $2.2 billion, blaming the credit crisis and slower Australian and New Zealand economies.
At the close of trade, ANZ's share price had lost 10.9 per cent to $15.81, after earlier falling as low as $15.40.
Fat Prophets analyst Greg Canavan says the news that ANZ's higher provisions slash its earnings by up to a quarter has shocked investors.
"To get that type of magnitude of a fall from a bank such as ANZ has really knocked the wind out of the whole banking sector," he said.
"I guess the other big question is how much more of this is to come?National Australia Bank last week announced it was expecting to lose just over $1 billion on debt-backed investments that had turned bad.