MENU

Super funds on track for double-digit returns

It may not seem like it, with the recent falls on the ASX, but super funds are on track for healthy returns in the 2013 financial year.

Despite the All Ordinaries Index (Index:^AXAO) (ASX:XAO) falling by more than 10% since mid-May, over the past year, the index is still up more than 14%, not including dividends. According to research house SuperRatings, the average balance fund is on track for a gain of between 13 -14% this financial year.

Research manager at SuperRatings, Kirby Rappell said, “At 13 per cent, it would be the sixth-highest returns and similar to those of 2003-2007, which were during strong economic conditions prior to the GFC.”

Funds with exposure to international shares have likely done even better, with the Dow Jones Index up more than 17% and the S&P 500 an astounding 19.7%. Add in the around 10% gains from the falling Australian dollar, and those funds are well ahead of locally only focused super funds.

The problem for Australian investors now is where they can go to replicate that growth in the year ahead. With the mining boom coming to an end, and other sectors such as retail, media, banks struggling with low levels of growth, it might be hard for investors to know where to look.

As we have suggested previously here at the Motley Fool, strong Australian companies that will benefit from the falling Australian dollar would be close to the top of the list. These include companies such as CSL Limited (ASX:CSL), QBE Insurance (ASX:QBE), and BHP Billiton (ASX:BHP).

Some economists are already predicting that Australia could be headed for a recession, as the mining boom tapers off and no other industry steps up to take its place. With offshore revenues making up a big chunk of earnings, all these companies are protected to a certain extent from the falling dollar, as well as the risks of a recession in Australia.

Foolish takeaway

The best protection for your portfolio is to have a well-diversified selection of good quality companies. That includes holding companies with offshore earnings, which could see individual investors beat the returns from the average Australian-focused share fund.

In the market for high yielding ASX shares? Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading


Motley Fool writer/analyst Mike King owns shares in CSL, QBE and BHP.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.