Super funds delivering 12 month returns of 6.8% are now almost two-thirds higher than their cash term deposit counterparts.

SelectingSuper has just reported that the workplace default option index for the 12 months to end August 2012 skyrocketed in August to 6.8%, the highest it has been in more than a year.

Meantime, one year retail bank term deposits are averaging around 4% after tax for a non-super investor.

Falling interest rates should also boost bond returns especially when combined with Australia’s safe haven status that has seen government bond yields fall to almost 3.2%.

The strong bounce-back in default super fund options was triggered by the 5.0% August monthly return from the ASX and the 4.5% from international share markets.

Rolling 12 month Australian equity returns are now 5% and international equity returns are 12%, representing a meteoric reversal in fortune in just the two performance months since June when super funds were averaging 0.5%.

Three year returns are meanwhile 4.2% pa and 10 year returns are 4.9% pa. Five year returns are still depressed at only -0.6% pa.

Not-for-profit funds achieved median 12 month returns of 6.9% and corporate master trusts 6.4%, resulting in a segment gap that is only 0.5 percentage points, the lowest it has been in two years.

While the market average was 6.8%, leading funds delivered almost twice this at 11.1%.

The top five Workplace Super funds (by default options) over the 12 months were Lutheran Super with 11.1%, QSuper with 11.0%, ESSSuper with 9.9%, and ANZ Staff Super, AE Super and Quadrant all with 9.0%.

The top five Personal super funds (by balanced options) over the 12 months were Host-Plus with 10.0%, Quadrant with 9.0%, OneAnswer with 8.9% and First State Super, State Super (NSW) and Perpetual Wealth Focus all with 8.6%.



By Alex Dunnin

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