There is a strong probability that superannuation funds members invested in growth options will experience back-to-back negative returns at the close of this financial year, according to research house Chant West.
The Chant West multi-manager median performance survey revealed that growth funds returned minus 5.4 per cent for the quarter and had plummeted 16.2 per cent for the financial year to date (FYTD).
"Most commentators are expecting that there's more bad news to come before there's good news. Basically there is a real possibility of much higher negative returns in 2008 and 2009 than there was in 2007-2008," Chant West principal Warren Chant said.
Growth funds are defined by Chant West as being those with 61 to 80 per cent allocation to growth assets and are the default options for most super funds members.
According to Chant, recent patterns have shown that returns were progressively worse the higher the allocation to growth assets.
Chant West data showed that high growth options (those with 81-100 per cent of growth assets) fell 7.2 per cent in the last quarter and returned minus 18.8 per cent for the FYTD.
Despite this, ASFA chief executive Pauline Vamos said that superannuation funds were performing well relative to the share market.
"Funds have been able to achieve this through asset diversification. It's important to remember that these are short-term results in a difficult market," Vamos said.
"ASFA urges all fund members to understand what investment portfolio they are in and its long-term outlook."
