The median growth fund was up 0.7 per cent for May, despite a 4.5 per cent fall in the Australian share market, pushing returns for the 11 months of the financial year to date to 16.3 per cent.
“With less than a week of the financial year remaining, we estimate that the median growth fund is up 14.8 per cent,” Chant West director Warrant Chant said.
“If that is maintained, it would be the second best single financial year result in the past 16 years.”
Growth assets such as Australian shares fell 4.5 per cent over the month and global and Australian real estate investment trusts fell 3.7 per cent and 5.4 per cent respectively.
However, Chant West said that the fall in the Australian dollar provided a buffer against the fall in growth assets, which contributed to the strong super fund result.
“Typically, growth funds have about 25 per cent to 30 per cent of their money invested in international shares, and a majority of the currency exposure is left unhedged,” it said.
“So when the Australian dollar falls, as it has recently, the value of those shares increases in Australian dollar terms.”
The research also found that industry funds outperformed master trusts in May, returning 0.8 per cent against 0.5 per cent.
Over the 10 years to the end of May, Chant West said that industry funds outperformed master trusts by 1.0 per cent per annum.
Chant West said the inverse relationship between share market performance and industry fund outperformance means that “industry funds have done better when listed markets have been flat or in decline, while more positive markets have favoured master trusts”.
“That pattern is likely to continue as long as the asset allocation difference between the two camps are so pronounced,” the research house stated.
