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23 March 2020  

Global markets experience dramatic change

The global macro environment has shifted dramatically since the beginning of the year, fuelled predominantly by the outbreak of the coronavirus teamed with a shock to oil prices. Equity markets across the globe have recorded dramatic falls with all sectors being impacted, albeit to different degrees. Oil prices are down nearly 50% and equity markets are generally down around 30% wherever you look around the globe. 

In February, China imposed drastic measures to curb the spread of the coronavirus including lockdowns of factories and in some cases whole towns along with school shutdowns. Although the authorities are now stressing orderly resumption of work and production, economic data suggests the economy has yet to restart in a meaningful way. Governments around the world have announced both monetary and fiscal measures to support their economies with the US Federal Reserve cutting rates a full percentage point to 0% and the RBA also announcing a cut to rates to a record low of 0.25%.

The Australian dollar depreciated further against major currencies in February and broke through the 60 cent US barrier and is currently in the mid 50’s versus the US dollar. This will make the Australian economy more competitive against other economies and also has helped cushion some of the fall in overseas stock markets. Listed property and infrastructure followed the downward trend of equity markets and produced negative returns for that month.

 

Performance update

The above-mentioned volatility has impacted investment option performance. Unit pricing and monthly performance can be found on our investment pages of the website. Here’s an update of our performance financial year to 18 March 2020, along with our longer-term performance.  

 

Super plans* Return for financial year to 18 March 2020
Premixed 
Balanced Growth -7.37%
Conservative -3.87%
Balanced  -6.38%
Sustainable Balanced -12.85%
Growth -10.38%
Single sector 
Just Shares -16.71%
Australian Equities -19.30%
International Equities -13.31%
Innovation and disruption -0.05%
Diversified Bonds -0.20%
Cash 0.78%

 

* Non-commutable Allocated Pension (NCAP) have the same investment returns as the Super Plans from 1 July 2017.  

 

Retirement plans (excluding NCAPS) Return for financial year to 18 March 2020
Premixed
Balanced Growth -7.59%
Conservative -4.14%
Balanced  -6.69%
Sustainable Balanced -13.52%
Growth -10.92%
Single sector 
Just Shares -18.37%
Australian Equities -20.64%
International Equities -14.60%
Innovation and disruption 0.82%
Diversified Bonds 0.14%
Cash 0.92%

 

Please remember as per our earlier article all investments have risks and that like any other long-term investment, you can expect your super to have ups and downs, which can be caused by global events.

The ups and downs are normal - because the value of the assets (like shares) that your super is invested in also goes up and down. If you see your super balance go down, it can be tempting to make a change to a more conservative investment option, like cash. But when it comes to super, it’s important to focus on the time your super has left to be invested and have an investment strategy that’s right for your personal objectives, situation and needs.

Super is a long-term investment, but of course some people are closer to retirement than others. Younger people may be happy to ride out the blips and recoveries along the way, while others may be more willing to look at other options because they feel retirement is closer. It’s worth bearing in mind that even if you’re retired or coming up to retirement age, your money may still need to be invested for another 20-30 years. Some people see their superannuation balance fall in value and are tempted to switch into a lower risk investment option, but by doing this, they may effectively be selling shares at a reduced value and missing out on the higher returns when markets recover.

Before taking quick action with your super investments, you should consider your personal objectives, situation and needs. Also remember that historical returns are no guarantee of future performance. 

Vision Super historical performance

(to 31 January 2020)

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