A ceasefire in the United States-Iran war helped superannuation returns recover in April and almost recoup the losses of the prior month, according to SuperRatings.
The superannuation research house estimated the value of a median balanced option in accumulation phase rose by 2.6% in April after falling by 3.2% in March, bringing the financial-year-to-date (FYTD) return to 5.5%.
The median growth option gained an estimated 3.1% while the median capital stable option improved 1.3% in April, producing FYTD returns of 6.2% and 3.3% respectively.
“Global markets ended April retracing much of the March losses,” SuperRatings Director Kirby Rappell said in a media release.
“The volatility reflects the world in which we are living, with markets hopeful for a sustained solution.
“However, the situation remains fluid, and its true impact on global inflation and supply chains is still unfolding.”
He said the Reserve Bank of Australia’s decision to lift the official cash interest rate on 5 May by 25 basis points underscored that inflationary pressures persist.
Pension returns experienced a similar recovery in April, with the median balanced pension option achieving an estimated return of 2.7%, compared to the March loss of 3.6%, lifting the FYTD return to 5.9%.
The median capital stable pension option was estimated to have risen by 1.4%, with the median growth pension option adding 3.4% over the same period, giving FYTD returns of 6.8% and 3.8%, respectively.
He said markets seemed to be responding strongly to positive news, underscoring the risks associated with switching to cash or other defensive assets in response to periods of negative returns.
“Members who switch their investment to more defensive options struggle to time their re-entry which can often lead to missing out on the rebound,” Rappell said.
