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SuperRatings   ⟩   News & Insights   ⟩   News   ⟩   Don’t panic! What superannuation is teaching the post-GFC world

AuthorGordon Toy

DateSeptember 20, 2018

CategoryNews

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Ten years since the collapse of US investment bank Lehman Brothers, Australia’s superannuation funds have accumulated over $1 trillion in retirement savings, providing a windfall for members prepared to take a long-term view.

According to data from leading superannuation research house SuperRatings, members with a balance of $100,000 at the end of August 2008, just days before the Global Financial Crisis (GFC) hit, would today have a nest egg worth $193,887 if they remained in a balanced option. In contrast, members who panicked and shifted their savings to a capital stable option would have a far smaller balance of $164,277 (see chart below).

Growth of $100,000 invested over 10 years to 31 August 2018*

Select index

Sep 2008: $100,000
Oct 2008: $93,353
Nov 2008: $90,450
Dec 2008: $90,338
Jan 2009: $88,670
Feb 2009: $85,424
Mar 2009: $87,337
Apr 2009: $90,006
May 2009: $90,915
Jun 2009: $91,397
Jul 2009: $94,705
Aug 2009: $97,655
Sep 2009: $100,145
Oct 2009: $99,093
Nov 2009: $100,391
Dec 2009: $102,592
Jan 2010: $100,366
Feb 2010: $101,206
Mar 2010: $104,141
Apr 2010: $104,055
May 2010: $101,430
Jun 2010: $100,180
Jul 2010: $102,184
Aug 2010: $101,783
Sep 2010: $104,063
Oct 2010: $105,455
Nov 2010: $105,268
Dec 2010: $107,043
Jan 2011: $108,102
Feb 2011: $109,281
Mar 2011: $109,652
Apr 2011: $109,811
May 2011: $109,531
Jun 2011: $108,808
Jul 2011: $107,304
Aug 2011: $105,334
Sep 2011: $103,426
Oct 2011: $106,298
Nov 2011: $105,223
Dec 2011: $105,108
Jan 2012: $107,510
Feb 2012: $109,440
Mar 2012: $111,072
Apr 2012: $111,406
May 2012: $108,961
Jun 2012: $109,234
Jul 2012: $110,408
Aug 2012: $112,219
Sep 2012: $113,877
Oct 2012: $114,846
Nov 2012: $115,459
Dec 2012: $117,671
Jan 2013: $120,685
Feb 2013: $123,038
Mar 2013: $122,810
Apr 2013: $125,289
May 2013: $126,153
Jun 2013: $125,391
Jul 2013: $129,204
Aug 2013: $129,774
Sep 2013: $131,505
Oct 2013: $133,828
Nov 2013: $134,879
Dec 2013: $136,821
Jan 2014: $135,663
Feb 2014: $138,502
Mar 2014: $138,010
Apr 2014: $139,007
May 2014: $140,472
Jun 2014: $140,725
Jul 2014: $142,442
Aug 2014: $143,676
Sep 2014: $142,818
Oct 2014: $144,568
Nov 2014: $145,646
Dec 2014: $147,346
Jan 2015: $150,189
Feb 2015: $154,641
Mar 2015: $155,571
Apr 2015: $155,103
May 2015: $156,605
Jun 2015: $153,442
Jul 2015: $157,002
Aug 2015: $152,421
Sep 2015: $150,902
Oct 2015: $155,412
Nov 2015: $154,909
Dec 2015: $155,161
Jan 2016: $151,662
Feb 2016: $150,911
Mar 2016: $153,491
Apr 2016: $155,594
May 2016: $159,150
Jun 2016: $157,558
Jul 2016: $161,736
Aug 2016: $162,200
Sep 2016: $162,273
Oct 2016: $161,039
Nov 2016: $162,917
Dec 2016: $166,420
Jan 2017: $166,237
Feb 2017: $168,066
Mar 2017: $170,570
Apr 2017: $172,944
May 2017: $173,763
Jun 2017: $173,797
Jul 2017: $173,884
Aug 2017: $174,922
Sep 2017: $176,558
Oct 2017: $180,564
Nov 2017: $182,828
Dec 2017: $183,906
Jan 2018: $185,451
Feb 2018: $185,092
Mar 2018: $183,760
Apr 2018: $186,737
May 2018: $187,424
Jun 2018: $189,935
Jul 2018: $191,930
Aug 2018: $193,887
$200,000
$180,000
$160,000
$140,000
$120,000
$100,000
$80,000

Source: SuperRatings

Interim results only

Source: SuperRatings

*Interim results

Investors who had stuck it out with their growth option would have fared even better, with $100,000 growing to $201,209 over the decade. The results show the importance of taking a long-term view, even in the face of severe crises such as the GFC.

“The failure of Lehman Brothers ushered in a period of intense crisis for the global financial markets, including in Australia,” said SuperRatings Executive Director Kirby Rappell. “We hoped then that the market crash would prove cyclical and that we would see a relatively quick recovery, but of course that did not happen.”

“But even in the face of the Great Recession, Australia’s superannuation funds have shown us that taking a long-term view and sticking with your investment strategy pays off. Super funds held their nerve and refrained from making rash decisions, and members continue to reap the benefits. After 10 years the GFC looks more like a speed hump.”

Interim results only. Median Balanced Option refers to ‘Balanced’ options with exposure to growth style assets of between 60% and 76%. Approximately 60% to 70% of Australians in our major funds are invested in their fund’s default investment option, which in most cases is the balanced investment option. Returns are net of investment fees, tax and implicit asset-based administration fees

According to SuperRatings’ data, the median balanced option grew at an estimated 1.0% in August, while the median growth option delivered 1.3%. Over ten years, results remain diminished by the GFC, with the median balanced option returning only 6.6% p.a. However, over the past seven years the median balanced option has returned a very healthy 9.3% p.a., with super funds riding the global share market rally which began in 2009.

“The lesson of the GFC is useful to bear in mind when confronting the risks and uncertainties in today’s market,” said Mr Rappell. “There are some significant risks, including the threat of tariffs on global trade and investment, central bank tightening, and the currency and bond crisis that has engulfed emerging markets. Funds need to maintain discipline and stick to their long-term return objectives in the interest of their members.”

Best and worst performing options over 10 years to 31 August 2018*

Source: SuperRatings

*Interim results

Australia’s top super funds take a long-term view

While the GFC continues to cast a shadow over long-term returns, Australia’s top performing funds have nevertheless delivered some impressive results. A comparison of balanced option returns shows that CareSuper remains ahead of the pack with an annual return of 7.6% over the past decade, followed closely by Equip MyFuture and HOSTPLUS.

Source: SuperRatings

*Interim results.

Source: SuperRatings

# IOOF Employer Super Core – IOOF MultiMix Balanced Growth Trust

*Interim results

Release ends

Warnings: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to “General Advice” (as defined in the Corporations Act 2001(Cth)) and based solely on consideration of the merits of the superannuation or pension financial product(s) alone, without taking into account the objectives, financial situation or particular needs (‘financial circumstances’) of any particular person. Before making an investment decision based on the rating(s) or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances, or should seek independent financial advice on its appropriateness. If SuperRatings advice relates to the acquisition or possible acquisition of particular financial product(s), the reader should obtain and consider the Product Disclosure Statement for each superannuation or pension financial product before making any decision about whether to acquire a financial product. SuperRatings research process relies upon the participation of the superannuation fund or product issuer(s). Should the superannuation fund or product issuer(s) no longer be an active participant in SuperRatings research process, SuperRatings reserves the right to withdraw the rating and document at any time and discontinue future coverage of the superannuation and pension financial product(s). Copyright © 2018 SuperRatings Pty Ltd (ABN 95 100 192 283 AFSL No. 311880 (SuperRatings)). This media release is subject to the copyright of SuperRatings. Except for the temporary copy held in a computer’s cache and a single permanent copy for your personal reference or other than as permitted under the Copyright Act 1968 (Cth.), no part of this media release may, in any form or by any means (electronic, mechanical, micro-copying, photocopying, recording or otherwise), be reproduced, stored or transmitted without the prior written permission of SuperRatings. This media release may also contain third party supplied material that is subject to copyright. Any such material is the intellectual property of that third party or its content providers. The same restrictions applying above to SuperRatings copyrighted material, applies to such third party content.

For more information contact:

Gordon Toy
03 9623 6373
Gordon.Toy@lonsec.com.au

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