Investment update 2019

2019 is shaping up to be another year of strong returns for the Fund, with Australian and international share markets contributing significantly to member returns. Our diversified strategy, which includes infrastructure, property, private equity and fixed interest, has helped smooth returns during bouts of heightened volatility throughout the year. 

Members benefit from strong returns

AustralianSuper investment options have provided positive returns over 2019 despite on-going market volatility. Positive returns were supported by the Fund’s diversified investment approach, strong investment markets and monetary policies aimed at boosting growth in consumer and business spending.

Looking at the 12 months to November 2019, AustralianSuper’s Balanced option delivered a return of 15.45% and the Choice Income Balanced option a return of 16.95%. The Balanced option remains a top performer among comparative super funds. 

 

COMPARE AUSTRALIANSUPER

 

  Balanced option Choice Income Balanced option
1 year % pa 15.45 16.95
3 year % pa 11.13 12.11
5 years % pa 9.61 10.53
10 years % pa 9.43 10.49
Returns shown for 12 months November 2018 - November 2019. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.

So far during 2019, Australian and international shares provided a significant contribution to the returns of the Balanced option. The increased allocation to fixed interest as well as improved returns from decreasing interest rates, also provided a positive contribution to performance. Returns from unlisted assets were also positive contributors, with Infrastructure, Property and Private Equity helping to lift performance. 

 

What’s been driving the market volatility in 2019?

A number of factors have contributed to the volatility in investment markets, including:

  • A slowing Australian economy.
  • On-going uncertainties around the Brexit deal.
  • Escalating and de-escalating trade tensions between the US and China.
  • Geopolitical tensions including drone strikes on Saudi Aramco oil facilities and the on-going riots in Hong Kong.
  • The announcement of an impeachment inquiry into President Trump’s interactions with the Ukraine.
  • Slowing US and European economies.
  • Central banks introducing monetary policies aimed at increasing economic activity and lifting both consumer and business confidence.

Moving forward, we expect that the Australian economy will stay under pressure supporting the case for infrastructure spending and long-term low interest rates.

On a global level, the unresolved geopolitical and trade events, along with weakening economic conditions, have the potential to negatively impact market returns.

 

AustralianSuper is taking measures to manage the impacts of volatility 

AustralianSuper’s investments team will continue to monitor market movements as well as the actions of policy makers and central banks and adjust the Fund’s investment strategy and portfolio positions to maximise long-term returns for members.

Weakening Australian and global economic conditions as well as continued instability in global markets, stemming from geopolitical and trade tensions, lead the Fund to remain cautious and maintain a more defensive portfolio position.

Here are the main changes the investment team have made to the PreMixed options to reduce the impact of market volatility while continuing to seek long-term opportunities to provide value to members:

  • We continue to hold a neutral position to shares and favour international over Australian shares. We also favour private equity assets given their potential to deliver stronger returns compared to shares over the long-term.
  • We have a higher weighting in fixed interest given the weaker economic outlook, expected rate cuts and continuing low inflation. Longer term bonds are preferred over cash as these provide a higher return in the low interest rate environment.
  • We continue to favour infrastructure assets in our unlisted assets portfolio. With interest rates likely to stay low for some time and listed markets facing pressure, we are looking for additional global opportunities. Infrastructure assets are expected to benefit member returns in the current environment.

 

What should members do about market volatility?

Market volatility is a normal part of investing, so it’s important to stay focused on your long-term investment strategy.

While it might seem like the best thing to do when markets are volatile is to sell out of shares and move to cash, AustralianSuper research1 shows that this strategy could be costly. Most people are usually better off sticking with their long-term investment strategy, providing its right for their personal objectives, situation or needs.

 

READ MORE: MARKET CYCLES AND SUPER – IT’S ALL ABOUT THE LONG TERM

 

Your Super

If you’re not sure you’re in the right investment option for your long-term retirement objectives, it could be worthwhile speaking to a financial adviser. An adviser can help you choose the right investment option for your needs. They can also help provide guidance during times of uncertainty, so you can stay focused on your long-term plan.

Taking control of your super can start with the simple step of understanding your contribution options or downloading the AustralianSuper app.

Investments Q&A with Mark Delaney

Mark Delaney is an investment specialist with over 30 years of experience. In the August investment Q & A Mark discusses what's been driving investment markets, the investment outlook, and how AustralianSuper members can prepare. Guided by one of the fund's Environmental, Social and Governance (ESG) experts, Mark touches on risks such as the US/China Trade war, other geopolitical risks, what the low interest rate situation means for investment returns and what the next 10 years looks like.

Video_Thumbnail

References: 

1. Empirics measured the impact of switching between June 2015 and September 2016 for AustralianSuper members. Consider your personal circumstances, needs and objectives before making financial decisions.  Consider your personal circumstances, needs and objectives before making financial decisions. 


This information is general financial advice which doesn’t take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898. 
Back to top