Downtrodden Super Funds Show Signs of Renewed Optimism for 2023

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Optimism is steadily returning for the future of superannuation funds, with signs of revival seen in 2023.

After an exceedingly tumultuous year, with global and domestic stock markets effectively depleting Australians’ retirement savings pool by tens of billions of dollars, balanced superannuation funds were nearly 5% lower at the end of 2022. This massive disruption has cost more than $3.3 trillion to our nation’s retirees!

Best Performing Superannuation Funds

Despite the nation’s two most prominent non-government analysts releasing rankings indicating top-performing funds have outpaced their share market counterparts, most investors are still likely to be dismayed at this year’s lack of progress.

Funds that invested heavily in unlisted assets experienced the most outstanding returns, even if those returns were still negative. Unsurprisingly, investors generally receive a premium for tying up their money over an extended period when investing in non-public investments.

According to Alex Joiner, the top economist at Industry Super owned IFM Investors that has investments in huge unlisted assets such as Brisbane and Melbourne airports, fund managers likely hit their “peak pessimism” by late 2022.

“Many superannuation funds drastically shifted their investments to defensive products, particularly government bonds and cash, to protect themselves during the downturn,” Joiner said.

“Investors are keeping their eyes peeled for central bank shifts, deflation to recede, and the harshest economic downturns in our rearview mirror. It’s believed that this all could be possible by mid-year,” he expressed.

Australian Superannuation Funds

As the year progresses, so does the confidence in many Australian superannuation funds. The majority of balanced funds are expected to be back on a firmer footing by the end of 2023, with many making up for lost ground through global and domestic equity markets.

“It is anticipated that super funds will start to show more consistent returns throughout the year as economies and equities recover,” Joiner said.

As Australian households move towards an economic recovery, superannuation funds will likely benefit from renewed optimism about their future performance. After all, these funds play a pivotal role in helping Australians live comfortably in retirement.

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