Sunsuper Market Wrap
Hi, I’m Brian Parker, and I’m the Chief Economist at Sunsuper.
<super>How did Sunsuper perform over the December quarter?
Sunsuper’s Balanced option for Super-savings accounts produced a return of 4.6% for the December quarter, and 12% for the 2017 calendar year.
<super> How have financial markets performed?
World share markets enjoyed another very strong quarter. All the major developed share markets produced positive returns with Japanese and US shares performing particularly well. The successful package of corporate and other tax cuts through the US Congress was greeted favourably by US and global share markets. Emerging share markets once again outperformed those in the developed world, with shares in South Africa and India enjoying very strong returns.
After underperforming international markets over recent years, Australian shares were among the best performing over the quarter.
Australian and global fixed income markets outperformed cash over the quarter and over the year to December, however overall returns remain modest largely as a result of yields remaining at historically low levels.
<How has the global economy fared?>
The global economic environment has remained kind to investors in growth assets. Economic growth has generally beaten expectations, most notably in the US and the Eurozone.
However, solid economic growth generally hasn’t resulted in significantly higher inflation. As a consequence, monetary policy settings remain very supportive of global growth, even in the US where the Federal Reserve continues to increase interest rates.
<super> How is the Australian economy performing?
Australia’s economy grew by 2.8% over the year to September. Public and private investment accounted for much of the growth over the quarter. More concerning is that consumer spending remains very subdued. Household spending volumes barely grew over the quarter as household incomes have shown only modest growth.
Labour market conditions are improving, particularly given the acceleration in full-time jobs growth over the course of 2017. This should result in some acceleration in wages, and hence household income over the coming year.
<super> What is Sunsuper doing?
In traditional asset classes, we continue to favour emerging share markets, although the strong performance of those markets has reduced their relative attractiveness. In developed share markets, our managers generally consider shares in Europe and Asia more attractive than in the US, where finding value is more challenging. Our fixed income portfolios continue to strongly favour higher quality corporate bonds over low-yielding sovereign bonds.
We still find alternative asset classes such as carefully selected hedge funds and unlisted assets as very attractive. These assets allow us to construct portfolios that tend to exhibit smaller fluctuations in returns over the short term, without compromising long-term expected returns.
We continue to find opportunities in these asset classes that offer very attractive medium to long-term returns. During the quarter, Sunsuper made a significant allocation to the provision of new (and much needed) aged care facilities in Australia, commencing with a facility in Townsville. We also added to our portfolio of airport assets by acquiring stakes in Bristol and Birmingham airports in the UK.
<super> What does it mean for your super?
Sunsuper has investment options that are designed to meet the needs of a wide range of members. We offer members a range of 20 investment options to allow you to tailor your investments to your needs. And remember, if you’re invested in Sunsuper’s default option, the Lifecycle Strategy, as you approach and then enter retirement, we automatically and gradually reduce your exposure to growth assets such as shares. We do that to reduce the impact of market downturns on your investment.
As always, I’d encourage any of our members to find out more about our investment options on our website, or to speak to one of our financial advisers to find out if the Sunsuper investment option you have is the right one for you. Please give Sunsuper a call on 13 11 84.
<Dissolve to disclaimer>
Past performance is not a reliable indication of future performance.
Prepared and issued by Sunsuper Pty Ltd ABN 88 010 720 840, AFSL No. 228975, the Trustee and issuer of the Sunsuper Superannuation Fund ABN 98 503 137 921, USI 98 503 137 921 001.
This presentation contains general information only. Any advice does not take into account your personal objectives, financial situation or needs. Accordingly, you should consider the appropriateness of any advice having regard to your personal objectives, financial situation and needs before acting on that advice.
A copy of the Product Disclosure Statement (PDS) can be obtained by calling 13 11 84. You should consider the PDS in deciding whether to acquire, or to continue to hold, the product.
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