Super returns just positive for May, but brace yourself for losses for 2007-08

After six straight years of watching their superannuation accounts grow, Australians are being warned to brace for bad news – in 2007-08 their super account is almost certainly going to post a loss.

Data from superannuation research firm SuperRatings shows that the average balanced fund posted a gain of 0.54% for the month of May, thanks mainly to reasonable performance of the global sharemarket. That reduced the loss for the financial year to 31 May to -2.44%.

But the good news ends there. Equity markets have performed badly in June, dropping around 3.6% through the months. SuperRatings says that is likely to blow the annual loss for the average balanced super fund out to around -6%.

It’s the first time super funds have returned losses since 2001-02, when global sharemarkets were reeling from the dot-com crash.

So how should you react to this bad news? Jeff Bresnahan, managing director of SuperRatings, says before you start panicking, it pays to have a look at the bigger picture. “Despite the short-term red ink, three and five year returns continue to hold up with median per annum returns of 9.7% and 11.0% respectively.”

For more information about whether or not to stick with your super fund, see Michael Laurence’s story on whether or not to dump your fund. He has six helpful tips that will put things into perspective.

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