The following is the output of transcribing from an audio recording. The transcript has been included to make the video accessible to people who are deaf or hard of hearing. Although all reasonable attempts have been made to ensure accuracy of the transcript, in some cases it may be incomplete or inaccurate due to inaudible passages or transcription errors.
Good evening and thank you for joining us for
Sunsuper's 2019-2020 annual member meeting. My name is Georgie Williams and I'm
a Director on the Sunsuper Board and I'm delighted to be your Emcee for
tonight. As our event is anchored from a business-based studio, I'd like to
begin with a welcome to country by the Yuggera Toorabul people.
(Aboriginal language spoken).
Ladies and gentlemen, welcome to our
ancestors' homeland, the land that we call home for over 65,000 years. The
Turrbal and Yuggera Aboriginal people of Brisbane City.
Quandamooka people, welcome. Gumby Gumby
people, welcome. Turrbal, Yuggera, Wikame..
(Chanting). (Bird sounds made). (Didgeridoo
(Aboriginal language spoken). (Aboriginal
music and singing).
I know many of you will have joined us in
person for our last member meeting in Brisbane. I don't think any of us can
believe that was only in February of this year. It's been an astounding,
confusing and emotional roller coaster at best, and at worst, many of us have
had our lives turned upside down. I'm talking to you from my hometown of
Melbourne, which I share with over 140,000 Sunsuper members, and as a mother of
two daughters, I can tell you even if this year hasn't shattered us, it has
One thing that
brought me great comfort this year is that thousands of hours we spent making
sure that all we did right across Sunsuper was only to consider member impact,
the impact on you, and tonight I'm very happy to be speaking directly to you, so
that we can share with you all that we've done and for so many members to be
able to join us remotely.
So it all hit in
March. Our TV screens were full of CentreLink lines, job losses, fear and
confusion about an uncertain future, and during that week we had to move all of
our staff offset and our investment team alone logged thousands of hours with
the best managers around the world to monitor and manage every one of your
investments 24 hours a day.
For your part, I
know some of you in those first few days, held on to our phone lines for up to
40 minutes to speak with us and ask for our help with what to do next, at a
time when your worlds were being blown apart. I can't thank you enough for your
patience, during what was a horrible time for you, and allowing us in a matter
of a few days to stand up our remote workforce.
But a part of
your Board and Executive, we realised that this year we not only had to think
about your tomorrow, we had to think about your today, and let me tell you that
truly galvanised us as an entire organisation. Within a day we knew that when
you needed your money, we were going to be there, and perversely from this far
apart I've never felt closer to our team and in front of you, our members, I
want to personally thank all of our staff and tell you how proud they made us.
Right across our
organisation we took a huge number of decisions to secure, protect and grow
your money, and that meant making some really hard decisions about expenses and
that started with us, the Board, who unanimously decided to take a 10% salary
cut to the end of 2020 and a salary freeze for Directors and Senior Executives
this financial year. In addition, our Senior Executives are not taking a bonus
in full year 2020.
As the impacts of
COVID became more apparent, Senior Management worked with all staff on many
more responses, which resulted in our staff voting themselves to forego their
scheduled salary increase this year. This was an agreed increase in enterprise
agreement, so no small ask. It was one of the moments I would like to think our
staff from the bottom of my heart.
Together at every
level of Sunsuper all of these actions showed us and you, we're not just any
financial services company, we are your company and we will fearlessly guard your
future. With all that we did, each and every Sunsuper member lived our mission
of members first in a very real way this year. Now, we'd like to share a video
that may help you to see some of the things that we have been up to as well
We're really proud to be part of Sunsuper. We
have moments, such as those earlier in the year, when we rallied really quickly
to the early release payments. We responded quickly and we were the front
runner in a whole range of APRA measures, in terms of speed to having payments
to our members in need and that made me really proud to be part of it, not only
the team that delivered that, but part of Sunsuper for the whole of
organisation effort together.
What makes me proud to work for Sunsuper is
having the opportunity every day to support our most vulnerable members and
their families when they need to claim on their insurance. We make a difference
to many lives every day.
Welcome back. So tonight's event will be in
two parts. Firstly, we'll have updates from our Chair, Andrew in Brisbane, and
our CEO Bern and Chief Investment Officer, Ian from Sydney, and that will take
just over half an hour, and then we'll answer your questions, and thank you to
those of you who submitted your question prior to tonight. But during the webcast
tonight you can also click on the little speech bubble on the bottom right side
of your screen to ask a question at any point in time or just provide us some
feedback. I know the team would love to hear from you.
Please be sure to
include your name and email address along with the question and we'll try to
answer as many of your questions as we can live, but if we don't get a chance
to answer them all, we already have quite a few, pre-submitted, we'll be
publishing all questions and answering them online in the coming weeks. We
won't answer through the broadcast, any questions that pertain to your personal
financial situation, for example, something very specific to your account. We
can answer those questions directly to you and for those questions we have a
live chat function.
So if you've got
one of those questions on your own situation, please click on the "i"
icon on the right-hand side of your screen and from there you can select
"Member Inquiries" or request a call back and one of our team will be
We also have the
rest of our Board of Directors and members of our Executive Leadership Team for
the broadcast, so they'll also be available to answer any specific questions
during the Q&A. And, finally, the legals. I need to let you know that the
information we're providing tonight is known as general information only. It's
about Sunsuper as a whole and doesn't take into account your personal specific
circumstances, such as your individual investment objectives or financial
And now I've done
that, I'd like to introduce Andrew Fraser, the Chair of Sunsuper, who's going
to provide an update on the funds strategy. Andrew was appointed as an
Independent Director of Sunsuper in September 2015 and he was appointed Chair
in February 2018. In a past life Andrew was a Treasurer and Deputy Premier of
QLD and he's now on the Board of Watpac, New Zealand Rugby League, 3rd Space
and the Hear and Say Centre. He's also the Chair of Motorsport Australia and
Andrew has worked
tirelessly this year for Sunsuper, not only has he spent a huge amount of time
leading across the issues I've already touched on, but he also spent time on
the phones in the member centre during March and April, making sure we knew
exactly what you were dealing with and what we needed to do. His commitment to
you and his commitment to Sunsuper this year was immense. Please welcome
Thanks, Georgie. I, too, wish to acknowledge
the traditional owners of the lands on which we gather tonight. Those lands are
potentially as far and as wide as the modern nation and as diverse as the
various Indigenous inhabitants whose original and enduring kinship with that
land I want to acknowledge and respect.
Welcome to all of
you, to this annual members meeting for your fund Sunsuper. It is, in fact, the
second meeting we've held and the second this calendar year. We welcome the
opportunity to report and the accountability to you, our members, the
beneficial owners of the fund. When we planned to hold this event we were
expecting something very different.
tonight to be a physical meeting and booked the Brisbane Convention Centre with
an online facility just for those unable to attend. Well, things are different.
We certainly didn't expect also to be on the State of Origin night, and for
those of you joining us from the nonrugby league states, there's many weird
things about 2020 and a November Origin Series is just one of them.
Nevertheless, wherever and however you are participating, welcome.
2020, of course,
has shaken many certainties and presented enormous challenges. When it comes to
what we do for you, growing and nurturing your retirement savings, that task
was made more difficult in a year in which one of the most significant,
economic dislocations has befallen not only Australia, but the globe. I don't
want to make excuses for the reality of negative returns for the 2020 financial
year. I do, however, want to acknowledge two fundamental points, which will be
addressed further by the CEO and CIO in the coming moments.
are cyclical from day-to-day, month-to-month and year-to-year. Some days are
down days and they're followed by up days and in a world of uncertainties it
remains some years will be down while others will be up. Secondly, but more
importantly, we're investing for you for the long-term. You don't retire every
day and retirement should be planned to be both long and happy. So we need to
invest on your behalf with that long-term perspective in mind.
It is painful for
me and for all of us to report to you on a tough year, but I see my job, and
that of the Board of your fund, to oversee a capable and skilled management
team, who we know has the capacity and a proven track record to deliver those
strong long-term returns. So despite the challenge of last year, we still
maintain a track record of delivering returns in our flagship balanced
diversified fund that exceeds benchmark returns, delivers on our promise to you
and beats the industry average. We intend to continue to apply ourselves to
that central task today, tomorrow and well into the future. We value the trust
you have in Sunsuper and take seriously our responsibility to you and your
Finally, I wanted
to touch briefly on the potential merger with QSuper. This has been a matter
canvassed in the public arena and, indeed, discussed at this forum earlier this
year. The report to you tonight on that front is that we remain in detailed
discussions with QSuper and we're committed to providing you with a further
update in the coming months. COVID has slowed progress somewhat, but it's not
changed the central point, and that is we will only proceed with a merger if we
can identify and be assured that the merger is in the interests of Sunsuper's
members today and into the future.
A larger merged
combined fund will potentially have the scale and capacity to achieve better
outcomes, harvest efficiencies of scale which can mean better returns and draw
upon the combined resources of a larger fund to deliver better services to you
as you plan and enjoy your retirement. That's the opportunity of the merger and
I look forward to updating you as soon as we reach a decision.
For now, thank
you again for joining us and I'll hand back to our Emcee Georgie to introduce
Thanks, Andrew. I'd now like to introduce
Bernard Reilly, Sunsuper's Chief Executive Officer, to talk to you about
Sunsuper's achievements over the past 12 months and our future plans as well.
Bernard has been with Sunsuper for just over 12 months and what a baptism he's
faced. Bern's had extensive global experience both here in Australia and
internationally in banking and finance.
Prior to joining
Sunsuper, Bern was a member of the Board Investment Committee at NSW Treasury
Corporation and he also had 25 years experience with State Street Global
Advisers, most recently in Boston and Sydney, in the role of Executive Vice
President, global Head of Strategy. This year Bern has led our team with
courage and commitment and it's been a pleasure to hear directly from staff
that felt directly supported by Bern in times of incredible pressure, but also
to see Bern courageously tackle the issues that secured your savings.
I've worked in
this industry for many years and it's a rare combination to have a CEO with
both great technical expertise, as well as the empathy and courage Bern
displays. We're very lucky to have had Bern leading us through this year. Over
to you in Sydney, Bern.
Thanks, Georgie, good evening. I'd like to
add my welcome to you and thank you for joining us online tonight. As Andrew
has already mentioned, when we held our inaugural member meeting in February
this year, none of us predicted the challenges that lay ahead. I can tell you
it wasn't the year I was expecting when I joined Sunsuper, but it was a year
that I got to know more about our organisation than I otherwise would have and
it is reinforced to me that as a member you are well served by the team at
I want to,
firstly, reassure you that throughout the significant health and economic challenges
that the world has faced over the past nine months or so, our focus at Sunsuper
hasn't wavered. The team has continued to come to work each and every day,
although a little bit differently than last year, to safeguard your super
savings. Everyone has been extremely focused on doing our part to help you when
you needed us and making engaging with us as easy and as straight forward as
When COVID first
hit earlier this year our initial focus was on helping you better understand
the impact market volatility had on your super investment and once the
government announced its COVID early release and super measure, we quickly
worked hard to ensure that the money was in your hands as quickly and as
seamlessly as possible if you needed it. And on both fronts I'm incredibly
proud of the work of the Sunsuper team.
We quickly hired
and trained 74 new temporary staff members in our contact centre to answer your
calls and respond to your queries, all 270,000 of them. We kept you up to date
and helped you understand the likely impacts of market volatility and the
details of the government early release measure. This included sending out
almost 5.5 million member emails, having almost 750,000 of you visit our
dedicated online information hub and having more than 18,000 of you dial into
one of our live or recorded webcasts.
And I'm proud to
say that for those of you that needed it, we made it as easy as possible for
you to access your super money. We were recognised as a leader in the industry
in the average time we took to pay members early release claims. In the first
tranche of the scheme to the 30th of June this year, we paid out $1.9 billion
to close to 272,000 members, with 90% of those payments made within three business
days and 99.6% within the ATO's recommended five business days.
So far in tranche
2, we have almost had 200,000 requests and paid out over $1.4 billion. All of
this we did in the midst of moving our entire team to remote working. Andrew
has already mentioned our 2019-20 investment performance, and I'll leave it to
Ian Patrick, our Chief Investment Officer, to speak in more detail, but I did
want to highlight that despite the sharp downturn in economic activity during
the March quarter, due to COVID, our performance rebound in the June quarter
and our long-term returns remain strong.
I won't hide the
fact that we are disappointed to see negative returns for the 2019-20 year for
our balanced option but, no, we expect to see negative returns once or so in
every 10 years, but that still doesn't sit well with us. Super is a long-term
investment and we accept that some years will be lower, possibly negative, with
an aim to achieve strong long-term returns, and with returns of 6.5% per annum
over the last five years and 8% per annum over the last 10 years to the end of
June, our balanced investment option, which most of our members are invested
in, comfortably performed better than the industry average over three, five,
seven and 10 years.
To add to this though,
we know that to maximise your super balance strong returns need to be
accompanied by low costs and so I'm pleased to see that fees remain amongst the
lowest in the industry and, as always, we continue to explore ways to further
reduce fees that you pay us to administer your account and invest your savings.
As a profit for members fund, protecting your future and the future of your
loved ones is as important to us as helping grow your savings. So we strive to
deliver the best products and services for you, including insurance cover.
From the 1st of
October this year, we introduced a range of improvements to our insurance
offering, including increasing the circumstances in which our insurer will pay
a lump sum and removing some limitations to make it easier for members to get
insurance cover. Challenges do bring opportunities and in 2020 technology has
been central to the significant changes in the way that our teams work and the
way that we deliver service to you. A financial advice offering, which we provide
to members at no additional cost, has definitely come to the fore this year. In
fact, our phone-based advisers have worked with over 3,500 of you in the first
half of this calendar year alone. They advised you on a range of super related
issues, including to ensure your investment strategy is the most appropriate
for your life stage and retirement plans, given the market volatility that
We also continued
our ongoing investment in the systems and processes to help us work with the
broader financial community, by making it as easy as possible for them to
manage their clients, our members' super savings. This is simply not possible
without a skilled and dedicated team, and I'd like to call out the work of our
IT teams in enabling the rest of us at Sunsuper to continue to deliver for
members, despite the dislocations to our working arrangements.
And while our
team were focused on what mattered, it was great to receive external
acknowledgment of their commitment as well. In addition to being named Super
Ratings 2020 Fund of the Year, we were awarded Chant West Fund of the Year for
2020 and that was the third time we'd received that award in the past four
years. The Chant West Award recognises a fund with outstanding performance in
member services, financial advice, investments, insurance, fees and overall
organisational capability. Chant West also awarded us Best Fund Member Services
for 2020, and that's the sixth time that we received that award in the last
eight years. And just last week Super Ratings awarded us their 2021 My Choice
While I am
speaking on the external environment, it would be remiss not to mention the
three key announcements in relation to super and super funds in the recent
Federal budget. Firstly, the proposed stapling of a member to their super fund
unless they make a choice. What stapling will mean is that in the future you
won't have more than one account, unless you choose to do so. Secondly, the
government also announced a new tool, YourSuper, to allow you to compare the
performance of super funds, along with an annual performance test for MySuper
products. And, lastly, additional requirements for funds to meet in criterias
acting in the financial best interests of members.
A key priority
for us in the next 12 months will be to monitor how these announcements
progress, but from our perspective we welcome reforms which improve efficiency,
transparency of the superannuation system. However, our main focus for the year
ahead and beyond is firmly on you, our members. Sunsuper largely achieved its
2020 vision that we set in 2015, in particular, to be one of Australia's top 10
funds by net assets, to deliver strong long-term investment returns and to be
respected in the industry and celebrated as a great place to work.
So we've set
ourselves an even bolder vision for the next five years to 2025. This vision
will help all of us at Sunsuper focus on delivering world class investment
management and distinctive member value, driving industry leading scale and becoming
a top five fund. But what that really means to you, as a profit for member
fund, is that you can take comfort knowing that everything we do day in and day
out is in your best interests and everyone at Sunsuper, from our investment
managers, our financial advisers, staff in our contact centre, to those in the
back office, risk and compliance and our HR teams will all be working hard to
fulfil our purpose, which to inspire and empower you to fulfil your retirement
I would like to
just touch on five of our top priorities as a team for the next 12 months.
Firstly, to the end of this calendar year we'll continue to support members
accessing early release and make sure that we get funds paid as quickly as
possible. We'll build on our investment capability and ensure that we're well
positioned to take advantage of investment opportunities within the market.
We'll reinvest in our technology improvements to deliver better services to
you, as well as our employer clients and financial advisers that we work with
on your behalf.
We'll continue to
focus on making it as easy and as smooth as possible for new members to join
Sunsuper directly. And, lastly, as I mentioned, we'll prioritise the strategic
shifts we may need to make in order to respond to the Federal budget
announcements, and obviously we'll continue to explore the potential merger
Thank you again
for joining us tonight and now I'd like to hand back to Georgie.
Thank you, Bern. I'd now like to introduce
Ian Patrick, Sunsuper's Chief Investment Officers, who's led our team of investment
professionals, the ones who were responsible for securing and growing your
future. Ian has decades of experience in the institutional investment industry
and Ian joined Sunsuper as Chief Investment Officer in November 2015. Prior to
joining Sunsuper he held the position of CEO at JANA Investment Advisers.
These years come
about very rarely but they test the metal of the team in ways you can never
predict and it's years like this that experience counts and let me tell you Ian
has experience in spades, both in managing the investment team but also his
steadfast mindset to manage through a crisis with only your long-term savings
in his mind. His team logged more hours than I could count and they were constantly
testing themselves and your portfolio, as well as engaging with the world's
best investment managers to find opportunities that will benefit you in the
future. Their commitment and Ian's leadership should make us all proud to be
with Sunsuper. Welcome, Ian.
Thank you, Georgie, and good evening, everybody.
It is my pleasure to talk to you this evening about the performance of the
Sunsuper portfolio. Before I do let me say personally and on behalf of my team,
that it is a privilege to have the responsibility to invest the savings that
you have entrusted to Sunsuper. I would like to thank those members who
submitted a question prior to this evening. It is unsurprising that a majority
of those questions address investment topics and so they have helped shape the
comments that I will make tonight.
In summary, the
questions were predominantly about the outlook for future returns and how we go
about investing on your behalf, including consideration of environmental,
social and governance criteria. In addition, I will start my presentation by
recapping the portfolio and how it fared in 2020, in one of the most
extraordinary investment periods I have witnessed, as well as how that
performance sits in the longer term context.
I will anchor my
comments this evening on the balanced option. As Bernard said, most members of
Sunsuper, including me, are invested in the balanced option. I recognise that
some of you joining the broadcast may well be invested in other investment
options, but my comments translate to those options too in principal. The
balanced option invests in a diversified portfolio of growth and defensive
assets and is designed to grow member balances at a rate exceeding the rate of
inflation in the long-term.
It also aims to
moderate the volatility of returns in market downturns. That diversification
served its purpose as market suffered deep declines in March 2020, although to
be clear and straight forward, we are disappointed not to have done a little
bit better for you in 2020. That disappointment is not intended to imply that I
think the impact on investment returns from COVID and the global recession that
followed could have been avoided. As I said a moment ago, the portfolio has
exposure to growth assets deliberately to grow your savings at a rate faster
than inflation and growth assets generally exhibit weak returns in a recession.
disappointment, I also have to remind myself that we have seen one of the
greatest pandemics since the Spanish Flu of 102 years ago. The greatest economic
contraption since the Great Depression, which ended 80 years ago. At one point
probably the greatest oil price decline ever and the greatest central bank and
government intervention of all time.
option had a return of -1.7% for the year to 30 June 2020. It was the first
negative performance for the balanced option since the 2012 financial year. A
negative performance year is quite within the realms of possibility, as Andrew
Fraser noted in his opening remarks. The Sunsuper Investment Guide indicates
that the balanced option would be expected to have approximately four negative
years in a 20-year period.
The chart shows
the annual returns over the prior 10 financial years. This is only the second
time the financial year return has been negative in the last 10 years and both
of those have been very small negatives in contrast to mostly strong positives.
It is pleasing indeed that performance has recovered since 30 June, sitting at
2.7% for the four months from then, but it still leaves me a little
disappointed that we didn't do better earlier in the year.
A decision to
invest in the balanced option should not be made a year at a time. This chart
shows the aggregation of the annual returns over longer periods. As you can see
the strong positive returns offset the occasional negative years to deliver
returns well in excess of inflation. Despite the test of the COVID period, it
bears reminding that the last 10 years have seen returns significantly above
In 2010 the
guidance provided to members was that the balanced option would aim to generate
a return of 4% above the level of inflation, the height of the blue bar on the
chart. The excess over inflation is what we call the real return. What emerged
in practice, including the COVID period, was a real return not 4% above
inflation but 6.2% above inflation.
The last piece of
longer term context, before I get to some of the back drop to recent
performance, is this chart. Investing $10,000 in the balanced option at the
start of the year 2000 would have generated a balance at 31 October 2020 of
approximately $40,000. The full period includes the dot com bust episode, the
global financial crisis and more recently the COVID period, and still the value
of the balanced option investment beats inflation by well over 4%.
Also note that in
contrast to the time taken for investment values to recover after the global
financial crisis in the late 2000's, the recovery in values after COVID has
been rapid. It took almost five years to return to the same dollar value as
just prior to the GFC, whereas the balanced option has already recovered nearly
three quarters of the value decline from the peak at the end of January.
balanced option includes a broadly diversified mix of traditional and alternative
assets, designed to optimize the trade-off between seeking returns whilst
moderating volatility and generating an acceptable level of risk. Amongst
traditional assets, bonds and cash are seen as defensive. That is, they tend to
provide a positive return when share markets are weak.
For a number of
years now, our challenge in deciding how much to allocate to bonds and cash has
been the exceedingly low reward these assets would generate for members over
the medium to long-term. Just a year ago had you invested in an Australian
Government bond for 10 years, it would have guaranteed you a return of just
over 1% over that period and not exceeded in inflation. For that reason,
amongst others, we invest in a range of alternative assets with defensive characteristics,
unlisted property, unlisted infrastructure and private debt strategies.
Keeping in mind
that allocation to different assets, how the different listed markets performed
over the financial year explains the performance of the balanced option. With
just short of 50% of the balanced option invested in shares, Australian and
international, the weak returns from those markets was a dominant influence. To
highlight the impact, Australian shares returned -7.6% over the 12 months to 30
June 2019, as shown in the chart, but 11.4% in the 12 months before that. It is
unsurprising that shares experienced weak performance, given how severe the
downturns have been in economic activity. Fortunately we do not make
allocations to real estate investment trusts or REITS, which have been
especially poor performers.
Recall that we
have allocations to both unlisted property and unlisted infrastructure in our
portfolio, the returns for these assets were between shares and bonds, as
broadly anticipated. Sunsuper's unlisted property assets returned -0.6%,
placing them just to the left of cash in the chart, and unlisted infrastructure
returned 1.9%, or slightly better than hedge developed market shares. Unlisted
property and unlisted infrastructure delivered good diversification, as I noted
at the start, but weren't as diversifying as bonds in the environment.
The 12 months to
30 June consisted of quite distinct periods, if one looks at the first seven
months versus the next five. The first chart shows the values of investments in
different asset classes, assuming you invested in 100 at the start of February
2020. Investing in a 10-year US government bond is especially identified. It
was the only meaningful positive performer and it was the dominant defensive
asset over that period with a return of some 10%, with most of that return
coming in the month of March 2020 when share markets cratered.
This next chart
extends the return patterns back to 1 July 2019, so that they end with the same
100 at the start of February to align with the previous chart. One thing to
notice here is how much more tightly returns of the different asset classes are
bunched in the period prior to February, when compared with the period
afterwards. It is good practice to examine strategy after a market event like
we experienced in March, in particular, to examine the role of alternative
investments and their defensiveness.
have delivered long-term value as part of the balanced option strategy through
strong returns and reduced volatility. This shows the long-term return for each
of our unlisted asset classes, property infrastructure and private capital.
Whilst they declined in value due to the COVID episode, the declines were not
near as much as they were for shares in the dotted line and values of these
assets have already shown some recovery.
The cash flows
generated by some of these assets were temporarily impaired, as with many
businesses. The impact on shopping centres, CBD offices, airports and assets
affected by the mobility of people in general is well-known. On balance, we are
pleased with the resilience of the assets in our portfolio. They have shown
they do have strong balance sheets and experienced managements and despite the
uncertainty ahead with respect to full resumption of normal economic activity,
they still represent unreplaceable assets and they are key to their respective
economies. Furthermore, the impacts on cash flows from COVID are reflected in
the value we hold those assets at today and they offer sensible value going
forward, when compared to shares and bonds.
I am now going to
transition from looking in the rearview mirror and spend a few moments in here
and now topics. Firstly, some recent investments and then a bit about how we
invest from an ESG perspective. COVID has accelerated transformation in several
sectors of the economy. Pleasingly we have been in a position to continue to
invest to benefit from some of those.
is a property investment focused on the development and operation of large
modern industrial warehouse facilities in key Chinese cities to benefit from
the tail winds of an increase in eCommerce and third party logistics.
Historically this has been a very fragmented market in China with a shortage of
world class facilities. The energy transition fund recognises that most new
energy capacity will be in renewables and gas and that will require significant
investment over the ensuing years to 2050.
South Eveleigh is
a recently completed asset and had its official opening in the midst of COVID,
as is evident from this picture. It underscores the point that I made earlier
about the unreplaceable nature of modern energy efficient and flexible office
space that will continue to be important to companies into the future.
As Georgie, Andrew
and Bernard each noted, it feels like a lot has changed as a result of COVID.
One thing that hasn't changed is that consideration of environmental, social
and governance, or ESG criteria, is central to investment decisions and the
ongoing management of assets in the Sunsuper portfolio. Sunsuper's approach to
responsible investing is comprehensive and you need only look at the
responsible investment report on our website to see that.
As you will see
from this slide, the range of ESG issues is meaningful and their relevance to
different investments is varied. The list on the slide is by no means
exhaustive. It is reflective of how we currently organise and prioritise our
activities in terms of the social licence to invest framework adopted by the
investment committee. As a general principle, we seek to influence change at
companies through a program of engagement with their managements and Boards and
through exercising our rights as owners through voting our proxies. We're
sensible. We join in collaborative research and engagement programs to ensure
our voice has the most effective impact.
Focus on the
approach of investors to climate change is ongoing. Since I spoke to you in
February, we have formally adopted a comprehensive plan to mitigate the financial
risks posed by climate change and to take advantage of opportunities as the
world transitions to a low carbon economy. We believe that the worst impacts on
your portfolio will be avoided, if we recognise in our investment approach that
the world will increasingly see limiting warming to 2 degrees below
pre-industrial levels, as the basis on which policy will be determined and
economies will be structured. Therefore, we have adopted a target of getting
the portfolio to a net zero emissions level by 2050. Getting there includes a
range of actions, amongst which will be changes to the portfolio and pursuit of
opportunities in green buildings, renewable energy, green bonds and new
technologies that meet our risk and return criteria.
In this last
segment of my presentation I want to turn to the forward view. The severe and
sharp impacts on global economic growth from COVID and the central bank and
government policy responses that followed are truly unique in history. Impacts
to global economic activity have largely been in line with the extent of
infections and the restrictions imposed to limit health impacts. It is no
surprise that Spain and the UK experience contractions in their economies of
greater than 20% in the June quarter when compared to December 2019. Whilst
Australia's contraction was less than 10%.
economies are predicted to show a strong rebound in economic activity after the
severe lockdowns of the first half of 2020, most are projected to still be
below their 2019 levels of economic output at the end of 2021. The lighter bars
indicate the forecast level that different economies will be operating at in
December 2021, when compared to December 2019. Again, it is probably not
surprising that a country like Spain, with a high reliance on tourism, is still
reasonably weak at that point.
The pathway to a
recovery for a country will depend on a range of factors. Looking at the top
group of factors here the extent and duration of support governments provide to
individuals and businesses will be important. Firstly, spending only recovers
if people have income to spend. Secondly, assurance of support is key to
confidence and individuals and businesses will only make future plans if they
feel a degree of confidence. Infection control success is also key to
confidence to get on with resuming normal activities and hence progressing
return of economic growth. Lastly, I mentioned Spain, in the context of a badly
We also need to
remember that investment markets look to the future. They incorporate future
expectations into today's prices. Therefore, it will be surprises that matter
to investment market outcomes and the more frequent and sizable the surprises,
the more volatile markets will be. We have witnessed some of that recently with
the bouts of optimism and pessimism surrounding the outlook for a vaccine and a
further round of government support in the US. Furthermore, given the potential
variation of outcomes from here, we should expect surprises and hence ongoing
volatility in markets.
As a final
comment on this slide, you will note the US election doesn't feature. History
shows us that speculation about the outcome and any surprises that result do
cause some volatility in the near term, but a given election has a very limited
impact on the medium-term economic growth trajectory and on markets.
yields are at near all-time lows and on negative in some countries. That does
not bode well for long-term returns from fixed income investments. Whilst we
will continue to hold some government bonds for ultimate defensiveness, we
continue to believe that a portfolio of thoughtfully diversified alternative
assets offer a much better risk reward trade-off in the medium term.
One thing that
does cause us some pause is the valuations at which some share markets are
trading. After the sharp rebound from the March lows. An over simplification
might be to say that those markets are pricing in a rapid return to prior
economic activity, or alternatively they have high levels of certainty about
the passive of a vaccine or the removal of restrictions.
still feel that shares are meaningfully more compelling an investment
opportunity than bonds over the medium term. However, we don't want to
concentrate risk in particular areas of the share market. Whilst COVID has
clearly been better for tech than tourism, this chart shows the sheer
divergence in the performance between the five mega tech stocks at the top of
the benchmark index for the US market, the S&P 500 and the remaining 495
stocks in that index. Our preference is to maintain broadly diversified exposures
to Australian and international shares.
In closing, I
want to acknowledge that this year has unquestionably been a challenging one
for you as savers, as much as it has been for us as investors. I cannot even
guarantee you that the worst of this is behind us. However, I do know a number
of things. Firstly, for the most part investing is a multi-year and even
multi-decade activity and strong portfolios of good assets have been shown to
deliver effective returns over those periods.
occasional negative returns are to be expected in the cycles of long-term
investing. Third, whatever the cause of the crisis that leads to market
volatility, in this case a global health crisis, economies do recover and
investment markets reflect that, often in advance, leading to recovery of
returns. Staying the course through the cycle is most often the best approach.
And, fourthly, crises do bring opportunities and capable investors with strong
liquidity can take advantage of those opportunities.
Finally, I can assure
you that I and the rest of the investment team at Sunsuper will continue to
manage your retirement savings with careful stewardship to achieve the
long-term returns necessary for you to meet your retirement goals. We never
lose sight of the fact that we are managing your, our members' retirement
savings, and in challenging times like these you can trust us to be working
tirelessly so that you can sleep well at night.
Thanks, Ian, and now it's time for your
questions. So alongside the panel, that includes Andrew, Bern and Ian, we're
also joined by Liz Hallett, who is the Chair of our Audit and Risk for the
Board. Bored. Liz was a Partner with international law firm Norton Rose
Fulbright for 22 years and she's now a professional Director and brings deep
legal, regulatory, corporate governance and risk management skills to the
Sunsuper Board. As you've heard, we moved pretty rapidly this year to implement
a number of systems and processes, and alongside the risk function, Liz ensured
not only we move quickly but that you were fully protected along the way.
Thanks so much, Liz.
Also, we have our
full team of Directors here and members of our Executive Team, our Fund Actuary
and our Auditors from Deloittes also join us. Just a reminder that you can
submit your question or comment now using the speech bubble located on the
bottom right of your screen and just include your name and address with your
question, so we can provide you a personal response if we don't get to your
question tonight, and remember if it's a personal request, in terms of your own
situation, just use that "i" icon.
Okay. So we're up
for the first question and the first question goes to Liz. Liz, this is a
question from our member Nia. Nia says, "There's been a lot in the news
about some wrongdoings at really big companies, Rio and AMP. What does Sunsuper
do in relation to corporate governance from the top to the bottom and how do
Thanks, Georgie. That's a really important
question and corporate governance is something that I am personally very
passionate about and good corporate governance is very important. At a Board
level, we are very active in our oversight of corporate governance in the
organisation and we work really hard to set the tone from the top. We explain
to the organisation what our expectations are about good corporate behaviour.
We also work really hard to encourage an open culture where people feel safe,
to be able to speak up when they identify issues.
I say to the team
when I talk to people, "You can lose one night's sleep over a problem that
you're worried about, otherwise speak to someone you trust", and we check
in with our people on a regular basis. Historically we would walk the floors,
now we talk to people via Zoom and Teams and we're looking forward to being
able to check in with them by person again. So corporate governance is
something that we take very seriously and we actively manage.
Thanks, Liz. So our next question I'm going
to throw to Ian, this question comes from David and David's question is,
"In these uncertain times, and in the face of low interest rates, what's
Sunsuper doing to develop innovative options for the controlled delivery of retirement
Thanks, Georgie. David calls out two things
that I think are important to get out early and that is the aspect of low
interest rates and the aspect of uncertainty. With respect to low interest
rates, it used to be the case in those good old days where one could invest in
a term deposit and live off the interest, such was the level of interest paid
on term deposits. Those days are long gone and as a consequence the source of
the question is entirely valid.
The second piece
that's important is the uncertainty, because it's also a well-established fact
that in circumstances of uncertainty people are reluctant to draw down on
capital because they are worried that future capital might not sustain them
through a full retirement and we're very conscious of that. My response to the
question would be, at the end of the day it's total returns that matter and on
a forward looking basis, as we think of a diversified portfolio like, say, the
retirement option, shares should, over the medium to longer term, deliver mid
to high single digit returns.
If we look at our
infrastructure and private - and unlisted property portfolios today, they also
have prospective returns in the high single digits. If you are invested in a
diversified portfolio of that nature, the anticipation is you'll be able to
derive sufficient return to both draw off an income and see through at least
the first few years of retirement continued growth of capital. That isn't to
say it will happen in a straight line, and I don't want to pretend that's the
The last two
comments I'd make is that structured delivery of income often comes at a cost.
There's a structure built around the investment to deliver that certainty of
income and that often turns out to be costly for members, and so we think a
well diversified portfolio at the end of the day is the best approach, as you
might expect, and the last comment in closing would be, I can only reflect on
the general. Anybody considering their circumstances, particularly the rate of
income they need to draw down and what their aligned goals are, should seek
Okay. Great. Thanks for that, Ian. Our next
question goes to Bern. Bern, this has just come in from Caroline and Caroline
is asking about the annual performance test for super funds and how we deal
with underperformance when you can't accept new members.
Thanks, Georgie, and Caroline, thanks for the
question. It's early days on that measure. As I mentioned in my remarks
earlier, they were announced in the budget just recently and so we're actually
waiting to see what some of the final details of the annual performance test
will be and the impacts of that. We expect we're going to hear something in the
next couple of weeks, at least before the end of the year.
though, I think, to reflect that from a Sunsuper perspective, as I mentioned
earlier as well, we support transparency and accountability for superannuation
funds. So any of those measures that are put in place, we believe, are a really
good thing for the industry.
The other thing I
mentioned as well was our long-term performance, you might recall, so I think
about our returns over three, five, seven and 10 years in the balanced option
were ahead of the medium - of the industry average, I should say, so I feel
that we are in a strong position as we look forward and, again, we welcome the
transparency in the industry. I think it reflects the importance of
superannuation as a pillar in retirement savings for all Australians and so we
take that responsibility very seriously. Thanks, Georgie.
Thanks, Bern. Okay. Our next question has
been asked by a couple of members. I know one was pre-submitted and I think
another member has asked on the night, so thank you to Morgan and Ranjit and
I'm going to send this question to Andrew, this is absolutely for you,
"Can you please cover the progress of the QSuper merger?"
Thanks, Georgie. As I said earlier, COVID has
slowed somewhat the pace of the discussions, the detailed discussions, that we
were having with QSuper, but just to repeat again, we are engaged in a detailed
due diligence process with QSuper. That's covered off by the, sort of, normal
confidentiality agreements that you would exchange when you're having those
What we're doing at
the moment is assessing the detail of what's in QSuper to make sure that we can
form a view as a Board, that there's a strong assurance that by merging will
create a stronger larger fund that's better for members, as I said earlier,
both today and into the future. That's work that's ongoing. It is complex. This
will be the largest merger of two superannuation funds in Australia, if we do
decide to proceed down that path, and so you'd expect us to be doing a lot of
work in order to satisfy ourselves, given our responsibilities to you.
We are also
engaged with APRA, the regulator about progress, to ensure that they're fully
informed of where we are, but as I said earlier and would take the opportunity
to repeat again now, as soon as we've got something more to say about that,
more certain, then you'll be the first to know as members.
Okay. Thanks for that, Andrew. And our next
question is for Ian. It's from Owen, "How do Sunsuper manage nonfinancial
risk factors, including ESG, when determining asset investment selections and
how is internal investment management performance assessed?"
Thanks, Georgie. I'm going to start - there
are two, sort of, distinct questions in there. I'm going to start with the
first bit about nonfinancial risks. When we think about investing, we are
ultimately seeking the best financial return for members. Risks of the nature
that I think this question goes to, which could be anything from poor corporate
governance to poor work health and safety practices to inappropriate dealings
in a conflict sense, those will all impact in the longer term the
sustainability of a business and therefore undermine the financial returns
generated by a business or generated by an asset.
So when we think
about the nonfinancial risks of the type I mentioned, or if you remember my
former remarks, the ones that were shown in that wheel of ESG activities, those
are all managed with a view to the sustainability of the business and we
approach it in a number of ways. One is clearly to engage with corporate
managements and we have good access, particularly in Australia, to the
managements and Boards of companies.
The other is to
vote our proxies very strongly and, particularly shareholder resolutions but
not only, we apply our minds very strongly to, and we have done all of this
since 2011, when we first brought on our responsible investment management and
that practice has built out effectively ever since. So it's a broad spectrum of
activity focused on both understanding the issues at play and then working with
companies to ensure that we draw to the attention of Boards and management,
what is important to us and what we think is important to financial returns.
The second part
of this question was around monitoring and managing internal investment management.
Let me be pretty straight forward and say Sunsuper has very, very limited
internal investment management. Our belief is that access to the best
investment minds in the world is the most appropriate model by which to deliver
superior returns to members, so we outsource or partner with investment
managers around the globe to deliver the investment management of our members'
money and as a consequence we have relatively little internal management, that
which we do have is governed as closely as any other activity and probably more
so that we undertake in the investment space. Thank you.
Okay. Thanks, Ian. Andrew, if you could step
up for the next question. Anita is asking, "What's the difference between
a profit for members firm, ie Sunsuper, and an industry super fund?"
Thanks, Anita. I think the first thing to say
is that industry super funds would be categorised as profit for member funds.
The critical thing about Sunsuper and other industry super funds, and indeed a
range of other funds which would be classified as profit for member, such as
QSuper, for instance, or Aware, is that they exist and generate only surpluses
and profits for their members. There's no shareholders who are entitled to a
profit. So the better we run the fund, the more efficiently we run the fund,
the more money we make with your investments. That all gets returned back to
the members through their stake in the fund.
So the real point
to make here is that both profit to member funds and those funds identified as
industry super funds are relatively the same thing, in terms of not having
external shareholders entitled to a profit. That's probably the key distinction
to make, in why there's two different descriptions used at different times.
Okay. Thanks. Ian, if you could step back to
the microphone, please. I've got a question here from Allan who says,
"According to your performance dashboard, Sunsuper underperformed versus
the average over the last year. What is it about your investment strategy that
Thanks, Georgie, and thanks again for the
question. I'll try and condense the remarks in my formal presentation to the
following: The dominant reason for underperformance relative to the broader
industry average in the course of the year, remembering that the long-term
returns have been very sound, was the nature of the defensive assets we held
going into the COVID crisis and you'll remember the chart that I showed with US
government bonds and the strong performance of government bonds as a defensive
We have made a
deliberate decision not to hold a large amount of government bonds and have
preferred alternative defensive assets or alternative assets with defensive
qualities like unlisted property and unlisted infrastructure. The reason for
not holding bonds is the prospect of returns from those and, as I noted, those
were circa 1% or not much more on a forward looking basis back a year ago.
The nature of the
pandemic though was such that meaningful sectors of the economy were shut down.
One only has to think of airports or retail shopping centres. Those form a part
of those alternative defensive assets that I mentioned, unlisted property and
unlisted infrastructure, so in the short-term they did not provide the level of
defensiveness you would normally assume in a typical recession. This was not a
typical recession. In a typical recession the activity or the circumstances
that lead to the recession are often financial or structural in the economy.
This was a government imposed lockdown, a very different recession shutdown
completely. A whole number of sectors. And that undermined the defensiveness of
That's not an
excuse. We aim to have a strategy that would see us through most market
circumstances and we still believe that the strategy of holding alternative
defensive assets is that strategy and that those assets will recover, have
already done so and continue to deliver value in an environment that forward
looking is incredibly looking for bonds. Thanks.
Okay. Thanks, Ian, and you may want to stay
at the microphone. Please do keep submitting your questions. We do have a large
number of them and I know there's still a few hundred of you waiting, so we'll
get there. This question is from Errol, "Ian, can you please let us know
what the anticipated returns are for the various Sunsuper investment options
over the next six months?"
And in responding to Errol, I'm going to
repeat a quote that I've read recently and it might sound a little trite but I
think it has a lot of truth to it and that quote goes something like this,
"We cannot know what the post-COVID future holds. We are still to live and
create that future and so it is too with investment returns". I don't know
what the future returns are, perhaps with the exception of a cash option. I
could probably venture that the cash option is going to be somewhere between
0.1 and 0.2% return per annum over the next six months, not a whole lot more,
but beyond the cash option it is incredibly difficult to apply any degree of
certainty to the forward returns.
Now, that is not
intended to be a cop-out. Short-term returns are a response to the emotions of
fear and greed in markets and there is a lot of potential for fear and greed in
markets over the next six months. Over the longer term, markets tend to deliver
returns that reflect value. What we know today about value is that bonds, as
I've already mentioned, are expensive. Equities offer a somewhat better
prospect on value and unlisted assets, to us, look even more attractive than
that. Whether that will come to fruition in six months or not, I cannot say.
I think one has
to, unless you have short-term commitments on which you have to realise assets
within the next six months, you have to take a three to five-month view at this
stage. That is the level of uncertainty about near term outcomes that exist in
this world, I'm sorry to say. Thank you.
Thanks, and one more for you, Ian, so don't
move far. This question comes from two members, Talai and Sved, "What's
your stance on cryptocurrencies and blockchain technology and will there be any
opportunities to buy cryptocurrency or invest in blockchain tech through Sunsuper?"
Thanks. A tricky question. My 15-year-old son
would not hesitate and tell me that I should be invested in cryptocurrency. My
dispute with him is as follows: Beyond the fact that it's the avenue used by
drug dealers and other criminals to money launder, but my issue is
fundamentally this, there is no income generated by cryptocurrency and the
factors, the fundamentals that drive its value and therefore will drive its
future return, are completely unknown, or certainly to us as professional
investors, and that makes it very hard to make a proactive investment decision,
especially when we're acting as a fiduciary for you, our members' savings, to
invest in cryptocurrency. I'm not dismissing it. I'm just saying in our
portfolios I don't think it is a sensible and credible investment decision.
The question on
blockchain I might leave. I think it's a transformative technology. It will
have influence across a range of interesting industries, potentially into the
future. It is probably an investment consideration like many others, you have
to think about where obsolescence in some industries can occur and how it might
drive changes in competition and therefore changes in value of different
businesses, but I might leave that one there. Thanks, Georgie.
No trouble at all. Bern, would you mind
stepping up to the microphone for this next question. It comes from Steven and
Steven asks, "Does Sunsuper see the act of members withdrawing both lots
of their super contributions as a risk to their business?"
Thanks, Georgie. I assume by risk to business
you mean a risk to the fund, so I'll answer it in that regard. The answer is
plainly no. We don't see that as a risk to the fund at all. I think there's a
couple of different dimensions that you can look on in the risk, two of those
I'll touch on, one would be liquidity. And Ian in his earlier remarks talked
about liquidity and how he managed liquidity through the crisis to be able to
deliver that $3.3 billion that we've paid out to date to members and I think we
managed through that very well and there was talk about - across the industry
about whether there was going to be some funds with some challenges and I'm
pleased to say that there weren't and we were able to clearly pay money out in
the short period of time that I mentioned in my discussion. You know, 99.6% of
members were paid out within five business days. That's one area of risk I'd be
The other area is
sustainability, and I look at a fund like Sunsuper. We paid out $3.3 billion to
date and our funds under management today stand at about $73 billion, after
having paid out that $3 billion. So sustainability relates to size, as well as
number of members. On the size side, clearly $73 billion positions us well
still in the top 10.
As it relates to
members, we have seen a small number of our members' balances go to zero, but
what we've actually started to see is those members who had to take out money
for early release, thankfully some of those have refound employment and they're
starting to contribute back into their super fund. So I think that bodes well
for their future on the members side as well. So I've put those two together,
liquidity and then sustainability, I think there's no risk in a fund like
Sunsuper. Thanks, Georgie.
Thanks, Bern. Our next question is for you,
again, Ian, and it's from Bruce. And Bruce asks, "Will the fund
performance improve over the coming years, as returns post-COVID drop but not
very promising for retirees? Other funds seem to be able to recoup losses
better than Sunsuper. Should I change my investment mix?"
Thank you. I think core elements of this
question I've touched on briefly in previous remarks and so I'll summarise in
saying, the background to the recoupment of returns post-March 2020, I think,
has been dealt with and if you don't mind I'll leave that one. It goes to that
question of corporate - sorry, government bonds versus other defensive assets.
about future returns, I think I said something along the lines of shares mid to
higher single digit returns, unlisted property and infrastructure, hopefully in
those mid to high single digit returns, if that's 70 to 80% of your portfolio,
which is what it would be for the balanced option, you're delivering, let's
say, 5% or so from that element of the portfolio. Bonds, which would be the
other 20 to 30% are giving you very little, let's say that's another half a percentage
point at most. You're talking about forward returns over a 10-year view of
something between 5.5 and 7.5%.
Now, the danger with
forecasting is the better forecasters were only luckier, and I'm not trying to
be flippant and funny with that, but that's the reality, but I think the sort
of level of returns we're talking about. We're not going to repeat the 10 to
12% that we'd seen through the particularly strong period after the GFC.
With respect to
the question of should you change your investment mix, that's entirely
dependent on your circumstances. This is the one time you should seek out those
people within Sunsuper that can genuinely help you through those considerations
and I encourage you strongly to do so.
Okay. Thanks, Ian. Andrew, if you could step
back up in Brisbane again, we've got a question from Ian, which is similar to
the one you took earlier but perhaps a little bit more specific, "When
will QSuper merge with Sunsuper and what is the proposed process and
Thanks, Georgie, and to go to the earlier
point, obviously we haven't decided to merge with QSuper. If we do make that
decision then it will be a very complex transaction, given the fact that both
funds are very large and the complexity that goes with that means that it will
take some time. So the earliest, if we made the decision, I think at this point
would be sometime next financial year but, again, that presupposes that we'll
make that decision.
In terms of the
process and the outcomes, the law is really clear on this. The duties that are
on the Directors, as Trustees of both funds, are really clear and they can only
make the decision if they have a reasonable level of assurance that the future
fund, the merged fund that is created will be, in fact, in the interests of the
Sunsuper membership as it stands today and, indeed, on the other side of the
transaction the QSuper Board would have to form that same view.
Once those two
Boards make that decision then there is a succession of one fund into the
other, to use the technical term, but that's something that would be
communicated to all members well in advance and, indeed, that's both the
obligation and the law.
In terms of the
outcomes, the thing that's extremely attractive about this concept and why
we're doing the work and testing the detail of this is it would create one of
the largest funds in Australia, an unquestionably strong fund that would have a
tremendous presence in the Australian market and with that strength means that
it's got heft in financial markets to be able to get better returns, to drive
better fee outcomes, to offer better services, to put the two funds together
puts two great funds together to make an even greater fund. That's the
proposition that we're testing. There's a lot of things that need to be worked
through. I'm trying to answer the question presupposing that we get there but I
do want to conclude by what I said at the start, and that is we obviously
haven't made that decision and there's a way to go yet.
Thanks, Andrew. We're going to go straight
back to you, Ian in Sydney, because I've got a question from Justine and she
asks, "With the cash rate being so low, how are you planning to be able to
deliver competitive positive returns on the lower risk investment
And thanks for that question. It probably is
one of the more vexing ones in the investment world at the present time, and
particularly for people, as I sort of referenced early in the context, the TD's
who rely on the income generation from a very stable capital base to provide
their ongoing income needs.
The reality of a
low risk option, and here we might use the Sunsuper conservative option as an example,
is that that kind of option is not only invested in cash or government bonds
with exceedingly low returns on a forward looking basis. Those options still
include a small allocation to shares and, in addition, some reasonably
meaningful allocations to some of the other alternative assets, all of which,
as I said, have return prospects that are probably meant to - sorry, mid single
digits or slightly higher single digit returns.
Now, the reality
is that that still probably means on a prospective basis a return somewhere in
the order of 4 to 5%, to take that very risky stab at a forward view, bear in
mind though that we have struggled to generate inflation in any developed
market in the world that has exceeded, sort of, the 1 to 1.5% level, and in
some developed markets it's even lower. So even at a 4, 4.5% level, one is
still seeing a healthy return from a low risk option, above the prevailing
level of inflation.
Now, the next
question that might follow from that, and I'm going to pre-empt it is, but what
happens if inflation ticks up again? The reality is that shares and alternative
assets, like unlisted property and unlisted infrastructure, have some inflation
resilience or some inflation sensitivity built into them. In different ways
they will respond to inflation but they do. And that's, again, a comfort in why
we have that diversified allocation for the low risk options, so that even if
inflation does tick up, and most prognosticators are not foreseeing that in the
very near term, but even if inflation does tick up there is some inbuilt
resilience within those options, so I wouldn't fret too much, but the point to
take away is in a low inflation environment, low returns relative to what we've
been used to perhaps five or 10 years ago isn't necessarily a bad thing. It's
discomforting but it's not necessarily a bad thing for your retirement savings.
Okay. Liz, if you would come back to the
microphone again, in Sydney. I've got a question here from Morris and Morris
asks, "Has Sunsuper revalued unlisted assets correctly?"
Thanks, Georgie, and I've got Ian here with
me in Sydney, in case I don't answer the question fully because there's two
parts to the question. First of all, management, the investment team under Ian,
ensure that valuations are appropriate and fair on an ongoing basis, not just
at the end of the financial year, and Ian and his team have a valuation
committee where they challenge the valuations of particular unlisted assets to
ensure that they are valued appropriately.
From a Board
perspective, from the committee that I chair, our job is to ensure that the
valuation process is appropriate and that the valuations and the financial
statements are correct. So what we do is a deep dive on a number of assets to
check that the valuation processes have been carried out appropriately and we
get management to justify the basis on which they have valued particular assets
so that we can check that the amounts in the financial statements are correct.
And then, finally, the financial statements are audited by our external
auditor, Deloitte, who are here tonight and I'm sure are also happy to take
questions. Ian, did I answer that appropriately?
Excellent. Thank you.
I just want to let you know it's coming up now
just after 10 to eight. We do promise to get you out on time and I would remind
you that if we don't get to your question, we will post the Q&A's online in
the coming weeks. We do have the next question for Ian and it is a very timely
question, Ian. Susan asks, "What is the impact of the US presidential
outcome on the global economy?"
And if only I knew. No. To be less - less
flippant with the answer, as I said in my prepared remarks, I don't think the
long-term - even the medium-term economic trajectory or impact on markets will
be meaningfully influenced by the outcome of this election. It is quite plausible,
particularly given, as we went into the studio this evening, it looked like it
was going to be a protracted declaration of the outcome into at least tomorrow
our time, that short-term volatility could pick up, but that is markets
adjusting in that fear, greed. It's either extremely certain or it's extremely
uncertain, kind of way, it's markets reacting to that.
what will determine future growth, what will determine future company earnings,
what will determine the capacity of economies to innovate, much of that is
unimpacted by the presidency or, in fact, any other movements in the US
government or any other national government around the globe. Thank you.
Okay. Thanks for that, Ian, and knowing that
we are coming up to the close so, again, we should get you out on time, which
would be 7 p.m. in QLD and 8 p.m. for the rest of the Eastern Seaboard. Thank
you to our panellists and thank you to all of you again for being part of
Sunsuper's 2019-2020 annual member meeting. Look, there were quite a few
questions we didn't get to, so please do expect to see those answers online in
the next few weeks and we'll also post the video of tonight's forum on our
website, because I know there was a fair bit of information in there.
If you've still
got questions on your personal Sunsuper account, our team will be staying
online to help you. So just remember click that "i" icon and choose
"Member Inquiries" or request a callback. Thank you again very much
for joining us tonight. It has been our very great pleasure to serve you this
year and we all look forward to continuing the work on your behalf through this
next year. I think we're all hoping for a less turbulent one. Best wishes to
you all and good night.