3 July 2024
Improving economic and investment market conditions have helped lift member returns in the 12 months to 30 June 2024. All PreMixed and DIY Mix investment options have finished in positive territory. Importantly, the Balanced option where most members are invested, returned 8.46% for the year in Super accounts and 9.25% for Choice Income (pension) accounts.
Below we look at the market conditions and returns of the last 12 months, the long-term impact on super and we address the ‘where to from here?’.
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Show transcript
Welcome to the end of financial year performance update. I’m Alistair Barker, Head of Asset Allocation at AustralianSuper.
If you’re wondering what that actually means – My role here involves setting how much money we allocate to each major type of investment (such as shares, cash, fixed interest) across the pre-mixed options that you and most members invest in. We have a deep internal team of experts that works with the Fund’s board, investment committee and Mark Delaney our Chief Investment Officer, to set the direction of this strategy.
When it comes to returns – I’m pleased to say - it's a good news story. For the 12 months to 30 June this year, every PreMixed and DIY Mix investment option has ended in positive territory.
Most importantly, the Balanced option, where over 90% of members are invested, has returned 8.46% for Super accounts and 9.25% for Choice Income or retirement accounts.
Let’s look at some of the conditions that have helped deliver these returns.
The main driver has been the strong growth in listed share markets here and overseas.
This stemmed from three key things:
Firstly - strong earnings growth from technology companies in the US.
Secondly – resilient consumer spending in Australia and overseas, which helped drive up company earnings and
Finally - easing inflation levels. This boosted investor confidence and the expectation that we have seen the peak in interest rates.
In our portfolio we saw Australian and international share markets perform over 10% this year, strongly contributing to the returns of the Balanced option.
While our short-term results are important, when it comes to super, it’s essential to stay focused on long-term returns – these are the results that will fund your retirement. And I’m happy to say that these results are impressive – since inception in August 1985, the Balanced option has delivered for members - with an average annual return of 9.26%.
This means that $100,000 invested in a Balanced option super account, 20 years ago would have grown to over $453,000 as at 30 June this year, without additional contributions.
Through our active approach, we have been able to invest through challenging periods like the Global Financial Crisis and provide solid returns for members as markets recovered and grew over time.
Looking ahead – we'll continue to monitor economic and market conditions to consider how we can best position your portfolios over the coming years and over the long-term.
This includes, how central banks and economies are coping with higher interest rates, how technological developments like AI impact productivity, company earnings and investment markets, and the potential risks including geopolitical issues and upcoming elections.
With investing, we continue to focus on assets that have the potential to grow your balance over time. In doing this, we seek to balance growth opportunities with diversification. That way, we aim to deliver positive returns to members, while providing stability in your returns during times of market volatility.
If you’d like to learn more about our investment strategies and how we see the economic environment, join our panel of experts on 13 August. This offers a great opportunity to ask any questions you may have about your super and how it’s invested. Registrations are now open on the AustralianSuper website.
Thanks for joining me.
End transcript
The rear view
Performance snapshot
| Investment Option | Accumulation returns 1 year to 30 June 20241 |
Choice Income returns 1 year to 30 June 20242 |
|---|---|---|
| PreMixed options | ||
| Balanced | 8.46% | 9.25% |
| High Growth | 10.20% | 11.25% |
| Socially Aware | 8.38% | 9.19% |
| Indexed Diversified | 11.51% | 12.82% |
| Conservative Balanced | 6.47% | 7.22% |
| Stable | 4.59% | 5.15% |
| DIY Mix options | ||
| Australian Shares | 12.67% | 14.09% |
| International Shares | 17.19% | 18.75% |
| Diversified Fixed Interest | 3.06% | 3.54% |
| Cash | 4.03% | 4.71% |
Economic and investment market conditions over the year
Although members continued to face challenges in the form of higher living costs, investment markets showed improvement across the year. Easing inflation, strengthening consumer spending and the significant earnings growth in the technology sector, were just some of the conditions that drove investment markets higher.
Listed shares help drive Balanced option returns
Supported by improving economic conditions, listed shares were the largest contributor to the Balanced option’s positive performance. We saw Australian and international share markets return about 12% and 19% respectively, for the year to 30 June 2024.3.
Returns from other asset classes like infrastructure, credit, fixed interest and cash delivered more moderate returns when compared to shares.
The ups and downs of different asset classes over the year highlights the importance of investing in a diversified portfolio across different asset classes, geographies and sectors – this is a key part of our investment approach.
For AustralianSuper’s Chief Investment Officer – Mark Delaney,
‘Our long-term investment strategy is designed to be resilient when markets move up and down. Diversification helps reduce overall risk, protecting against losses in single asset classes and improving the chances of achieving consistent returns over time.’
What these returns mean for your super
A long-term perspective
When it comes to super – it's more about the marathon than the sprint. The Balanced option has consistently delivered strong long-term returns. Over the last 20 years, it achieved an average annual return of 7.85% for members with Super accounts. Your commitment to the long-term really matters.
Illustrating the impact
Imagine if you had invested $100,000 in the Balanced option 20 years ago. Today, your super balance would be $453,848. That’s more than four times your initial investment.
Growth of $100,000 invested in Balanced option – Super - over 20 years to 30 June 2024
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. 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. Returns from equivalent options of the ARF and STA super funds are used in calculating return for periods that begin before 1 July 2006.
Where to from here?
Signs of growth ahead
We’re seeing positive signs in global economies and investment markets which should help support member returns.
We’ll continue to monitor how central banks are managing interest rates, how changing economic conditions influence consumer spending and how technological developments like AI impact productivity, company earnings and investment markets.
Balancing growth and stability
Based on this improved economic outlook, the Investment team have been adjusting the investments in the Balanced option. This has meant a small increase in our exposure to growth assets like listed shares. Over time, we expect to add additional exposure through unlisted assets like private equity, infrastructure and private credit.
With investing, we’re balancing potential growth opportunities with diversification to deliver positive returns to members, while providing stability in your returns during times of market volatility.
Tags:
References
- AustralianSuper super investment returns are based on crediting rates to 30 June 2024, 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. 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.
- AustralianSuper 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.
- Australian shares is the S&P/ASX 200 Accumulation Index, International shares is the MSCI All Country World ex Australia Index (in AUD).
This may include general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/PDS or by calling 1300 300 273. 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.
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