Strong start to 2019 for most super funds

Chant West has the latest performance stats:

Super funds have kept up their strong start to 2019, with the median growth fund (61 to 80% in growth assets) gaining 2.7% in February on the back of the ongoing rally in share markets.

“World share markets have traded in a V-shaped pattern over the past few months and that holds some lessons for super fund members. No-one wants to see the value of their savings fall, but when you see an abrupt sell-off followed by an equally sharp gain it should act as a reminder not to react to short-term volatility. The worst thing to do after the December quarter falls would have been to switch into a more conservative option with a lower exposure to shares. Not only would you have locked in the losses, but you would also have missed out on the January and February rebound. As always, the message is to choose an appropriate option and stick with it.

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Maybe.

My take is that usually you should choose an appropriate option and stick with it – but “usually” is not “always” as Chant West suggests. When markets are particularly overvalued or undervalued there can be a case to be tactical. Sometimes there is a case for pulling the sails in and battening down the hatches. In particular, I’m not a supporter of sailing into a housing crash while loaded up on expensive Australian equities while the RBA continues to focus on the most lagging of indicators, unemployment.

The MB Tactical Funds have outperformed since inception, although the outperformance was not as much in February as our portfolios have been selling into the rallies:

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Damien Klassen is Head of Investments at the Macrobusiness Fund, which is powered by Nucleus Wealth.

The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Damien Klassen is an authorised representative of Nucleus Wealth Management, a Corporate Authorised Representative of Integrity Private Wealth Pty Ltd, AFSL 436298.

Comments

  1. Some funds will change their asset allocations, to a degree, over time to reflect excessive or attractive valuations. Others won’t.
    The tone of this post conflicts with your HostPlus post the other day which said that that fund advised to avoid bonds. The irony being that that particular fund carries a structurally high growth exposure and virtually no exposure to ‘pure’ defensive cash or high grade bond assets, takes a very long term view and tends to not ‘tactically’ manage its asset allocation.

    It would be great if you could understand how funds operate before you assess/critique/compare them. Granted, this type information is typically not readily available to consumers.

    • Damien KlassenMEMBER

      Nope. Same message in both, now is not the time to be a hero. But nice trolling. Great use of a straw man.

  2. I did well, dropped ours in conservative at the peak, then on 24th Dec, we both pushed the money back into high growth, now dropped to conservative/medium growth,