MLC Market Watch

As further evidence that the Australian sharemarket is indeed rallying to a sustained recovery, superannuation funds have risen for the sixth month in a row, offering some much needed relief to pensioners and retirees.

The latest SuperRatings research shows the median balanced superannuation fund rebounded 14.3 percent between March and August this year.

This results in a minus 7.9 percent performance for the year and a positive 5.4 percent return for the five year period.

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MLC Investment Strategist Brian Parker provides five traps for interpreting performance surveys:

No-one currently invested in superannuation funds or managing funds on behalf of super fund members has ever experienced anything like the kind of financial conditions we have seen over the past twelve months. Apart from cash and nominal government bonds, every other major asset class has performed poorly. This has been the worst global financial crisis since the Great Depression.

The pain of experiencing poor returns can be exacerbated if an investor feels they have performed even worse than others courtesy of the fund or funds they have invested in. Consequently, the plethora of fund performance surveys, particularly as quoted in the press, get a lot of people talking about relative performance. There’s nothing particularly wrong with this, provided you know the limitations of these surveys, and can interpret the results. Here then, is my list of five traps for the unwary when it comes to interpreting performance surveys.
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