Superannuation members whose assets were diversified across a range of categories had experienced markedly stronger returns in the 10 years since the global financial crisis (GFC) compared to those in a cash option, according to the Association of Superannuation Funds of Australia (ASFA).
ASFA chief executive Martin Fahy said for the typical fund member who remained in a balanced option, over the 10-year period to June 2018 investment returns have added more than 85 per cent of the original balance, while the savings of those in growth options have grown by more than 90 per cent, even without contributions.
“An individual who sought to avoid any risk at all by investing in cash would have fared much worse, being up only 40 per cent over the 10-year period,” Fahy said.
For instance, a member with a $100,000 balance in a cash option in 2008 would now have $140,000. Those who went from balanced to cash in 2009 at the bottom of the market due to the GFC would have performed even worse.
They would be up only around 10 per cent from 2008 to 2018, according to ASFA.
The balance of a typical member in a balanced investment option in their super dropped around 20 per cent between 1 July 2007 and 30 June 2009, even with the benefit of diversification.
Fahy said over the past five years, a cash option in super had returned only around 2 per cent a year, while the typical balanced option delivered between 9 per cent and 10 per cent a year on average.
“Super assets are generally diversified across a range of categories and it is this diversification that enables individuals to weather volatility in the price of specific asset classes like shares,” he said.
