September 2022 quarterly performance update

17 October 2022

Quarterly returns remain resilient – despite volatile investment markets

Investment markets rose and fell sharply throughout the September quarter. AustralianSuper’s PreMixed investment options finished the quarter slightly lower. The Balanced option returned -0.38% for accumulation accounts and -0.37% for Choice Income accounts for the three months ending 30 September 2022.

As AustralianSuper’s Chief Investment Officer Mark Delaney comments, “Members’ retirement balances remained resilient in the face of a volatile period for investment markets. This outcome speaks to the benefits of diversification and active management – both cornerstones of AustralianSuper’s long-term investment strategy.

“Volatility impacts returns day to day. Yet, history shows that staying invested in a diversified portfolio of quality assets grows members’ retirement balances over time.”

AustralianSuper’s investment team is anticipating and adapting quickly to changing market conditions – to protect members’ super in the short term – while investing in attractive opportunities to grow members’ super in the long term.

 

Events impacting performance for the three months ending 30 September 2022

It was another quarter of ups and downs in investment markets.

High inflation, rapidly rising interest rates and uncertainty around economic growth and corporate earnings triggered falls in listed equity and fixed interest markets. This volatility impacted investment option returns. Investment markets gave back their gains from July and early August, to finish the quarter with low or negative returns.

Investment market volatility has continued into the December quarter. In the first week of October, equity markets rebounded strongly from their September lows. These short-term falls and rises highlight the importance of focusing on long-term investment performance.

 

Investment option performance

The performance of each of the PreMixed options was slightly negative for the three months ending 30 September 2022. Over the long term, the PreMixed options continued to deliver strong performance. The average return over 10 years for AustralianSuper’s Balanced option is 8.85% per annum to 30 September 2022. The flagship Balanced option ranks in the top two for investment returns over 7, 10 and 20 years1.

 

Super and TTR Income investment option performance as at 30 September 2022
Investment Option 3 months 1 year 5 years pa 10 years pa
PreMixed Options
High Growth -0.25% -5.80% 7.50% 9.79%
Balanced -0.38% -4.75% 6.81% 8.85%
Socially Aware -0.85% -6.20% 5.27% 8.07%
Indexed Diversified -0.40% -7.89% 5.62% 6.85%
Conservative Balanced -0.61% -4.72% 5.10% 7.02%
Stable -0.58% -3.82% 3.66% 5.34%
DIY Mix Options
Australian Shares 0.50% -2.86% 8.56% 9.67%
International Shares -1.19% -15.01% 8.56% 11.78%
Diversified Fixed Interest -1.36% -5.82% 0.77% 2.83%
Cash 0.41% 0.56% 1.05% 1.71%

AustralianSuper investment returns are based on crediting rates, which are returns less investment fees and costs, the percentage-based administration fee deducted from returns from 1 April 2020 to 2 September 2022 and taxes. Returns don’t include all administration, insurance and other fees and costs that are deducted from account balances. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns.

The performance results for members in Choice Income accounts tells a similar story. The Balanced option for Choice Income accounts delivered a return of -0.37% for the September quarter and an average return of 9.74% per annum over 10 years.

Choice Income investment option performance as at 30 September 2022
Investment Option 3 months 1 year 5 years pa 10 years pa
PreMixed Options
High Growth -0.21% -6.18% 8.22% 10.81%
Balanced -0.37% -5.08% 7.38% 9.74%
Socially Aware -0.84% -6.84% 5.83% 8.99%
Indexed Diversified -0.58% -8.76% 6.24% 7.89%
Conservative Balanced -0.58% -5.20% 5.67% 7.91%
Stable -0.57% -4.24% 4.06% 6.01%
DIY Mix Options
Australian Shares 0.71% -2.59% 9.78% 10.92%
International Shares -1.32% -16.44% 9.15% 13.05%
Diversified Fixed Interest -1.47% -6.57% 0.94% 3.26%
Cash 0.46% 0.65% 1.23% 2.01%

AustralianSuper investment returns are based on crediting rates, which are returns less investment fees and costs. Returns don’t include all administration and other fees and costs that are deducted from account balances. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns.

As we can see from the tables above, returns for listed shares were mixed. Australian shares held their ground compared to international shares. In Australia, the financials, materials and energy sectors performed well. These sectors make up over half of the Australian equities portfolio.

Fixed interest investments did not play their traditional defensive role. A sharp rise in interest rates and high inflation drove negative returns for this asset class.

 

Actively managing the portfolio through volatile markets

The outlook for investment markets is expected to continue to be challenging. Uncertainties around global growth, controlling inflation and further interest rate rises are all likely to be ongoing drivers of volatility.

AustralianSuper’s team of more than 2502 investment professionals has decades of experience managing the portfolio through market uncertainty. The investment team has been anticipating an economic slowdown for quite some time and has been preparing the portfolio accordingly.

We’ve been reducing the risk in the portfolio – by reducing our exposure to growth assets over time, in favour of asset classes that carry lower levels of volatility. Our approaches to active management and portfolio diversification are designed to help cushion the impact when investment markets fall.

Periods of market volatility also create compelling investment opportunities for long-term investors. Our size, scale and global investment capabilities enable us to act on investment opportunities to maximise long-term returns for members.

Read more: Understanding what your super is invested in

 

History shows markets recover

It can be unsettling for members to see their super balances tread water, and in some cases, even go backwards. When it comes to your super, it’s important to look past short-term market movements and consider your super as a long-term investment.

The old saying, “it’s not about timing the market, but about time in the market,” has proven true over the years. The chart below demonstrates this point. If you had a balance of $100,000 20 years ago your super balance would now be $465,594. If you started 5 years ago with a balance of $100,000 your super balance would now be $139,068.

The chart shows the performance of the Fund’s Balanced option over 20 years, from 30 September 2002 to 30 September 2022. It uses a starting balance of $100,000 and shows how over 20 years that balance has grown to $465,594.

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

Read more about investment performance

Our 2022 Annual Report is now available. It outlines how we continued to deliver for members and focus on helping members achieve their best financial position in retirement.

The report provides a summary of our investment performance, operations and financial position for the 12-month period to 30 June 2022.

READ MORE: LEADING THE WAY FOR MEMBERS – ANNUAL REPORT 2022

References

  1. AustralianSuper Balanced investment option as compared to the SuperRatings Fund Crediting Rate Survey – SR50 Balanced (60-76) to 30 September 2022. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.
  2. As at 30 September 2022.

Investment returns aren’t guaranteed. Past performance is not a reliable indicator of future returns.

This information may be 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. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/tmd. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.


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