Growth funds in superannuation schemes had the best monthly performance in over a decade in April as the local equity market recovered from a six-year low.

But returns for 2008/09 so far are still languishing, unable to fully recover from the heavy stock market losses of late 2008 and early 2009.

The median growth fund, which allocates between 61 per cent and 80 per cent of its investments to growth assets such as shares, returned 3.4 per cent in April.

This was the best monthly return since 1997, superannuation research firm Chant West said.

For the 10 months to April, growth funds returned a negative 14.8 per cent.

The monthly and financial-year returns reflect the performance of the All Ordinaries index which gained six per cent during April.

But this gain only went a fraction of the way towards recovering from the losses of the prior six months.

The All Ordinaries slumped 42 per cent from the start of the current financial year to an almost six-year low 3,111.7 on March 6.

While it has risen since then it is still down 30 per cent for the financial year to date.

“Over the past three years, returns have been progressively worse the higher the allocation to growth assets,” Chant West said.

“This is exactly the opposite of normal long-term expectations, and illustrates the severity of the recent falls and the inherent risks associated with higher growth portfolios.”

Chant West said the median “all growth” fund returned 5.8 per cent in April, and negative 20 per cent for the financial year to date.

Conservative growth funds, which allocate between 21 and 41 per cent of investments to growth assets, returned 1.6 per cent in April, but only lost 4.3 per cent during this financial year.

Over a five-year period, conservative growth funds returned 4.6 per cent per annum, compared with the 4.5 per cent return for growth funds and 3.1 per cent for all growth funds.

Comparing sectors, Chant West said industry growth funds returned 2.9 per cent during April, while the equivalent retail master trusts returned 4.3 per cent.

Over the five year period, the industry funds returned 5.5 per cent per annum, compared with the 3.1 per cent return by master trusts.