Australian superannuation funds have been among the worst performers in the advanced world throughout the global financial crisis because of their high dependence on the stockmarket, a new report says.
The Organisation for Economic Cooperation and Development's latest pension report found Australian funds lost more than 20per cent in 2008. Although most countries had returned to solid growth in the first six months of this year, at an average of 3.5per cent, ''Australian superannuation funds delivered only a 1 per cent return''.
Worldwide, pension funds have recovered more than $A1.6trillion of the $A5.8trillion market value lost last year.
The report said Australian funds had the highest exposure of OECD nations to equities, at 59 per cent last year.
''In other counties, pension funds have benefited from having a large proportion of their assets invested in bonds, whose rates of return tend to be lower but more stable than those of equities,'' it said.
Super Ratings chief executive Jeff Bresnahan disputed the OECD's figures for Australia for this year, saying the markets and super funds began growing again in March and ''performed strongly ever since''. The September quarter recorded 9.3 per cent growth, taking the post-March bounce to about 17 per cent.
Longer-term results showed strong growth in Australia. Superannuation was back at the same spot it was three years ago, but five-year averages showed 5.5 per cent annual growth and seven-year averages showed almost 7 per cent.
''Quite clearly what that is showing is in the short term your equities can be volatile and can hurt returns, but in the longer term I think you will find that we are ahead of the OECD median investment portfolio, because of our skew towards growth assets,'' he said.
CommSec chief economist Craig James said the Australian sharemarket had soared more than 50per cent or $500 billion since March.
More than 40 per cent of these gains came from just six stocks: the big four banks, BHP-Billiton and Rio Tinto.
He said comparing current share prices with analysts' forecasts put the price-to-earnings ratio at a seven-year high of 18.24, or 15 per cent above the decade average.
''So on the basis of earnings expectations, the share market appears slightly expensive. The question is whether analysts are unduly conservative compared with the views of the market [views that are incorporated into share prices],'' he said.
''But certainly from all the developed sharemarkets and economies, you would have thought Australia was in the best position to claw its way back to those highs [of late 2007].''
The S&P/ASX 200 share index closed at 4753.5 last night compared with about 6800 in late 2007.
Meanwhile, the National Australia Bank's quarterly business confidence survey showed confidence was back at levels last seen in early 2002.
''While the Australian economy continues to outperform, we still see a good deal of current momentum as being brought forward by policy stimulus. Hence we would see the potential for a broadly flat outcome for [the second half of] 2009,'' it said.
An expected series of rate rises, tipped to continue next Tuesday, would also push the Australian dollar to a peak of $US1.03 mid next year.
The survey found a ''remarkable divergence'' between business confidence and capital intentions.
''While business has become much more confident, that has not translated into plans to increase capital spending. This divergence has very important growth implications and puts a real note of caution against overly optimistic growth expectations,'' it said.