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Most superannuation investors failed to switch to another fund despite big losses in the worst performing year since super contributions became compulsory in 1992.

Around 77 per cent of all superannuation investors left their funds in balanced or growth-style funds while those funds posted record losses, according to superannuation research company SuperRatings.

Managing director Jeff Bresnahan said only 3.8 per cent of the funds were switched into other investment options over the past 12 months.

Investors had been playing a blame game and asking why super funds did not automatically switch their money into a cash investment option when financial markets fell, he said.

“The individual has had a choice of investment options for well over a decade and yet they’ve chosen not to get involved with their super or understand the risks of a balanced or a growth option.”

SuperRatings’ combined index of retail and industry superannuation funds with a `balanced’ investment option showed the average fund was on track to post losses of at least 10 per cent in 2008/09.

The fund is the typical default option for investments and includes all investment asset classes.

Although the average balanced option fund gained 1.01 per cent during May, annual losses to June 30 of as much as 14 per cent are expected, which would make 2008/09 the worst performing financial year since compulsory superannuation was introduced in 1992.

SuperRatings said the last two years were also the worst on record after three “incredibly strong” years, as the average loss for a balanced option fund was 6.4 per cent during 2007/08.

“Pensioners have been much more active in controlling their money,” SuperRatings analyst Nathan McPhee said.

“They may also be in more contact with financial advisers and they’ve had a much more pronounced shift to less risky or cash investments.”

Pensioners apparently voted with their feet during 2008/09 and pulled 8.4 per cent of their monies out of balanced option funds and rushed into cash.

Pensioners’ monies invested in cash option funds jumped by 10.8 per cent to 14.5 per cent in 2008/09 from 3.7 per cent the previous year.

The best performing balanced option fund lost 7.75 per cent for the 11 months to May 31, 2009 while the worst plummeted by 21.93 per cent, SuperRatings said.

Industry funds led the way during 2008/09, with Queensland building industry fund Buss(Q) the top performing balanced option fund over the past five years, with a 7 per cent a year compound returns.

The top 28 performers were industry funds, with Asgard’s balanced option fund the top retail master trust at spot 29.

“Some of the industry funds with very large exposures to non-liquid assets have seen below-average performance,” Mr Bresnahan said.

“But by and large the industry funds have maintained their competitive advantage over the last 12 years, which goes with their dominance over the last decade.”

Rolling five-year returns for the average balanced option fund stood at 4.75 per cent at May 31, thanks to the final three years of the surging bull market that finished with the 2007 credit crisis.