Super crash

29/07/08
Super crash

The median balanced super fund lost 3.9 per cent in June, and 6.39 per cent over the year to June according to data released by SuperRatings yesterday.
The losses are the worst annual results for super funds since superannuation became compulsory in 1992.
SuperRatings found that the gap between the best and worst performing balanced funds over a 10 year period was 5.56 per cent.
Had two people invested the same amount in the balanced options of these two funds, the difference in their current benefits would be approximately 68 per cent.
Many super funds are holding up to 20 per cent of their funds in cash investments, up from an average of about 5 per cent.
The funds that performed the best for the year to June 30 were Vision Super, PSS and MTAA.

Source: News.com.au

Hi Tropo,

Interesting read.
I'm amazed that the MTAA Super fund has only dropped -2.46% in the July 07 to June 08 period (MTAA Super: Interim crediting rates)

I know that the MTAA Balanced fund is extremely agressive for a balanced fund (ie, about 80% to 85% or so in growth, whereas the industry standard is around 70%).

Having a closer read they invest in what they call "Target Return Assets" which include Subordinated debt, property, infrastructure, private equity and natural resources. It sounds like there is not daily pricing for these investments so it could be hard to tell what the actual price of these investments are if they were to be sold today (could be more, could be less).

Cheers,

Dan

PS Before making an investment decision speak to your FPA registered Financial Planner.

Hi Dan,

To me the most amazing stuff is here = “Had two people invested the same amount in the balanced options of these two funds, the difference in their current benefits would be approximately 68 per cent”.

It makes you wonder isn't it?

Tropo

I agree, but perhaps one of them had shares in Centro and others shares that dropped a lot and the other option didn't.
Under a normal share market correction the difference between the 2 options would have been small but this is no normal correction.
Also, who would have thought that our very wealthy banks would be hit so hard?

Cheers

Bill,

Personally, I would not care less what the reason is (Centro, XYZ , ZYX or flood in lower Mississippi Delta Region).
Who told you that current correction is not normal?.
What you are witnessing, is normal bear market behaviour, which is not as bad as 1987 (as yet).

What made you think that banks are immune and wealthy?
Every time I listen to TV ‘gurus’ and/or ‘experts’ I apply salt, Cayenne Pepper and bottle of Calvados.

Yeah the MTAA fund is 100% growth assets so not a balanced fund (which is why it has out done all other balanced funds over the long term). but for a 100% growth a loss that small is very good. However 50% of it is invested in unlisted assets such as private equity and infrastructure, which as you say are not priced daily nor are they priced by a volatile market.

a rather dangerous position to be in if you ask me, but as long as the **** doesn't hit the fan it should be alright. but there are better 100% growth funds out there...

I hear it on the news.
Wait for the usual "increased profit announcements" soon
and I also see it on my bank statement.
5 words "They are ripping us off"...

Cheers

"5 words "They are ripping us off"..."

Now you’re talking...

I'll be interested to see what happens one day when a whole swag of MTAA members try and pull their funds out and it becomes apparent that MTAA's AA is illiquid and are in a similar position to westpoint, fincorp etc!

Also, how ASIC haven't forced them to rename their funds. Their balanced fund is 99% growth assets, and their growth fund is only 95% growth assets???????

Anyway, i was expecting MTAA's results to look very poor come July, but looking at their figures they apparently don't even value their unlisted assets once a year! I'd love to be a fly on their investment committee's meetings......."What return will we have this month fella's???" "Well everyone else is losing 10% this month, so we better be realistic and make it -2.4%; but don't worry, next month we'll declare a 3% gain to make it up"

Ben

If you expect your investment to grow in a straight line, invest into Fix interest.

getting 4 years of 20%+ PA returns, and then the 5th year comes back down 20%, and your upset at this, then you have a mis-understanding of the investment your in.