The momentum following Australia's historic 5-0 Ashes win continues. After further disappointing and gut wrenching performances (at least for English fans) from the English cricket team in the recent 20/20 match and one-day series, Australia has prolonged its winning streak. Australian super funds also look set to continue their winning streak in delivering strong returns for members.
Research reports released earlier this month from Intech and Morningstar showed growthorientated super funds delivered another year of strong returns in 2006. Australian shares were singled out as the stellar asset class. "Australian shares ended 2006 in record high territory, returning 24.2 per cent for the year, and 25 per cent per annum for the last three years, making it the best three calendar years since the stock market crash of 1987," the Intech report said.
However, as doubts are cast on whether the Australian cricket team can continue its strong performance following the retirement of four senior players, super fund trustees and their members are also wondering how long the local share market can sustain its ability to deliver positive returns.
To date the super industry remains optimistic about the domestic share market. At a session held during the Association of Superannuation Funds of Australia conference in November last year, 40 per cent of conference delegates polled said they believed the Australian share market would deliver returns between six to 10 per cent. Almost 55 per cent believed the market would still deliver 11 per cent to 15 per cent return. Investment managers, however, remain more sober about the outlook for the market.
A survey from Russell Investment Group found 37 per cent of local managers believed the local market was overvalued, while 61 per cent thought the market had reached fair value. AMP investment strategist Shane Oliver said the continued flow of money from a mandated super environment as well as the excess global savings would counteract any dampening impact on the Australian equity market.
Russell investment strategist Andrew Pease pointed to the Future Fund, with its $32 billion worth of investable assets, which he said would ensure continued strong demand for Australian equities. Pease also identified strong company earnings as another contributing factor in underpinning the performance of the local market. Just as the wash of savings and strong domestic company earnings look set to sustain the performance of the Australian share market, so to do the likes of Michael Clarke, Michael Hussey and Adam Gilchrist look set to continue the strong performance of the Australian cricket team for the rest of the summer and beyond.
