Investment strategy and outlook - 31 December 2023

Learn more about our investment strategy and outlook for the year ahead.

Read on or jump to a specific topic:

Performance update

AustralianSuper’s Balanced option returned 3.60% for Accumulation accounts and 4.04% for Choice Income accounts for the quarter ending 31 December 2023. All PreMixed and DIY Mix investment options delivered solid investment performance for both the quarter and the calendar year.  

Performance across the portfolio has been largely driven by growth outcomes, market sentiment and expectations around central bank monetary policy. Listed share and fixed interest markets retracted in October as the US unemployment rate rose slightly, spurring speculation that it might continue rising. At the same time, market participants became concerned by the historically elevated levels of debt being issued by the US government. The market narrative shifted after data showed inflation was lower than expected. 

This led to hopes that interest rates may have peaked, driving November and December gains in both listed share and fixed interest markets.  

The performance outcome was a positive end to the calendar year for each of AustralianSuper’s investment options. The Balanced option’s performance was mainly driven by strong returns from listed shares and fixed interest, as well as more modest returns from unlisted infrastructure.

Super and TTR Income investment option performance as at 31 December 2023
Investment option 3 Months
(%)
1 Year
(%)
3 Years p.a.
(%)
5 Years p.a.
(%)
10 Years p.a.
(%)
15 Years p.a.
(%)
20 Years p.a.
(%)
PreMixed Options
High Growth 4.03% 10.81% 7.01% 9.37% 8.82% 9.07% 8.32%
Balanced 3.60% 8.96% 6.07% 8.05% 7.94% 8.27% 7.97%
Socially Aware 3.82% 8.59% 5.30% 6.74% 6.97% 8.18% 7.23%
Indexed Diversified 5.32% 12.53% 6.28% 8.11% 6.78%

Conservative Balanced 3.07% 7.06% 4.00% 5.93% 6.25% 7.02%
Stable 2.65% 5.09% 2.42% 4.01% 4.84% 5.62% 5.75%
DIY Mix Options
Australian Shares 6.74% 12.81% 11.52% 11.47% 9.01% 10.35% 9.52%
International Shares 4.41% 17.69% 6.47% 12.02% 10.59% 10.43% 7.87%
Diversified Fixed Interest 2.36% 3.20% -0.66% 0.91% 2.65% 4.42% 4.54%
Cash 0.99% 3.54% 1.61% 1.40% 1.76% 2.43% 3.19%

AustralianSuper investment returns are based on crediting rates, which are returns less investment fees and costs, transaction costs, the percentage-based administration fee deducted from returns from 1 April 2020 to 2 September 2022 and taxes. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns. Returns from equivalent options of the ARF and STA super funds are used in calculating return for periods that begin before 1 July 2006.  

For TTR Income accounts, the investment return is based on the crediting rate for super (accumulation) options. From 1 April 2020 to 2 September 2022 the crediting rate includes an administration fee that is deducted from investment returns for super (accumulation) accounts. TTR Income accounts will be adjusted to refund the administration fee deducted from investment returns. All TTR Income administration fees are deducted from account balances.

Choice Income investment option performance as at 31 December 2023
Investment option 3 Months
(%)
1 Year
(%)
3 Years p.a.
(%)
5 Years p.a.
(%)
10 Years p.a.
(%)
PreMixed Options
High Growth 4.46% 12.04% 7.77%
10.33% 9.77%
Balanced 4.04% 10.04% 6.62% 8.79% 8.75%
Socially Aware 4.26% 9.71% 5.81% 7.46% 7.81%
Indexed Diversified 6.00% 14.51% 6.99% 9.12% 7.76%
Conservative Balanced 3.51% 8.05% 4.43% 6.64% 7.09%
Stable 3.00% 5.89% 2.68% 4.50% 5.48%
DIY Mix Options
Australian Shares 7.37% 14.44% 12.93% 12.96% 10.18%
International Shares 4.83% 19.42% 6.92% 13.01% 11.60%
Diversified Fixed Interest 2.79% 3.72% -0.85% 1.08% 3.04%
Cash 1.16% 4.16% 1.87% 1.64% 2.07%

Choice Income investment returns are based on crediting rates, which are returns less investment fees and costs, transaction costs and taxes. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns.

Economic perspectives

Global central banks raised interest rates aggressively over the past two years and there is evidence that the higher interest rate environment is weighing on economic growth, particularly in Australia. However, other factors partly offset the interest rate impact in 2023, including strong population growth in Australia and strong support from the government sector in the US. The effects of monetary tightening often have a lagged impact on economic conditions and the investment team does expect only moderate growth in 2024.

Although the current central bank tightening cycle has succeeded in reducing inflation, central banks have indicated they will need to see more evidence of cooling inflation before interest rates fall. The investment team remains cautious about underlying inflation dynamics, which will likely constrain the extent of interest rate cuts in 2024. The team will continue to closely monitor central bank activity.

AustralianSuper’s outlook and investment strategy

Given the potential for slower economic growth and an assessment that growth asset valuations are a little expensive, we may see continued volatility in investment markets and more modest returns in the medium-term, as compared to the past 10 years. The portfolio is positioned to provide a balance of growth potential and downside protection. The Balanced investment option is expected to outperform the median in an environment where listed share markets fall.

The investment team is closely monitoring central bank activity, key economic indicators, valuation trends and geopolitical developments as we progress to the next stages of the economic cycle. Weaker growth and volatility may present attractive buying opportunities in the year ahead. As active managers, the investment team will seek to deploy capital when opportunities present themselves. 

Asset class highlights:

  • Australian shares drove positive performance during the quarter. The portfolio has outperformed both its benchmark and the international shares portfolio for the financial year-to-date, driven largely in recent months by strong commodity pricing from iron ore and gold. 
  • International shares also contributed meaningfully to performance during the quarter, boosted by the continued strength of the technology sector.  
  • Unlisted infrastructure provided additional stability to returns, with modest positive performance during the quarter. 
  • Unlisted property, private credit and private equity detracted during the quarter under pressure from the lagged effects of the tightening cycle. 
  • Fixed interest posted strong returns during the quarter, delivering both high interest payments and capital gains as bond yields fell. 
  • Cash had positive performance during the quarter, supported by higher levels of short-term interest rates. 

Real assets

During the quarter, AustralianSuper announced the formation of the Real Assets investment team, which combines the existing Infrastructure and Property teams. This change aligns with the Fund’s one-portfolio approach and better facilitates a more holistic view of potential investment opportunities within the real assets market.

Several themes are shaping the investment opportunities available in real assets. These themes are listed below with examples of assets held in the portfolio as at 31 December 2023.

Theme Portfolio holding Location Description 
Digitisation

Indara

Australia

Leading owner and operator of tower and rooftop telecommunication sites. 

Vantage Data Centers

Europe, Middle East
and Africa

Leading global provider of hyperscale data centres.
Energy transition General Capital United States
One of the largest owners and operators of behind-the- meter battery storage, community and rooftop solar, energy efficiency retrofits, biogas facilities, electric buses and hydrogen-electric vehicle fleets in North America. 
Estates Canada Water London, UK 53-acre development in central London. Expected to have 3,000 net-zero homes, sustainable workspaces for approximately 20,000 workers and 12 acres of new open space.  
Toll roads WestConnex NSW, Australia Toll road project with a 70-kilometre network of roads. 
Transport logistics Moorebank Logistics Park
Sydney,
Australia
 
State-of-the-art facility that connects Port Botany to the interstate rail network. 
 

See your advice options

Face to face, online or over the phone, our professional advice can give you the perfect game plan for your super.

find out more
Back to top