While both international and domestic equity markets witnessed significant sell-offs in early August, they largely managed to recoup those losses, with Chant West analysis suggesting the average growth fund was down just 0.6% in August so far.

This means that members’ balances have risen by around 1.4% compared to the end of FY23-24, it explained.

Looking at the performance of super returns over the past month, the research house noted that the new financial year was “initially off to a flying start for super funds”.

The medium growth fund (61 to 80 percent in growth assets) rose 2 percent in July, while all growth (96 to 100 percent in growth assets) and high growth (81 to 95 percent in growth assets) were increased by 2.8 percent and 2.3 percent, respectively.

Meanwhile, the average balanced fund (41 to 60 percent growth assets) was up 1.6 percent and the conservative option (21 to 40 percent) was up 1.3 percent for the month.

According to Chant West senior manager of investment research Mano Mohankumar, softer US inflation data followed by a hint of a rate cut by the US Federal Reserve in September boosted equity and bond markets in July.

Australian shares rose 4.1 percent, he said, while international shares rose 1.2 percent in hedged conditions.

"But the depreciation of the Australian dollar pushed returns in unhedged terms to 4.1 percent," Mohankumar said, noting that on average super funds have about 70 percent of their international equity exposure unhedged.

He also noted that there was a market rotation during the month, with the value style significantly outperforming growth stocks.

"As bond yields fell in July, bonds also had a strong month, with Australian and international bonds up 1.5% and 1.9% respectively," he said.

Reflecting the market volatility seen in early August, Mohankumar reiterated the long-term focus of super returns in the face of short-term panic.

"We know from past experience that equity markets, which remain the main drivers of growth fund performance with an average allocation of 55 percent, can be incredibly resilient," he said.

"Members should also take solace in the fact that most have invested their super money in well-diversified portfolios whose investment exposure is spread across a wide range of asset classes." This helps ensure a smoother return trip by cushioning the blow during periods of equity market volatility while capturing a significant portion of the upside when equity markets perform well.”