Share market investments can be very volatile over the short to medium term but historically, these investments have offered the highest long-term returns
|Standard Risk Measure|
|Risk label of||High|
|Expected frequency of negative return in 20 years||4 to less than 6|
Investment management fee
Deducted as part of the weekly unit price calculations, and gross of tax deduction.
AvSuper’s investment portfolio is managed by a carefully selected group of Investment managers and overseen by our Investment Committee. AvSuper uses a range of professional investment managers who specialise in different investment areas to invest members’ money according to specific objectives and strategies (including strategies to guard against excessive risk) set out by the AvSuper Trustee. The Trustee monitors and regularly reviews all investment managers involved with our investments.
See our top ten Australian shares.
Most investments are classified within various main groups known as asset classes. The following is a brief outline of the major asset classes AvSuper uses to diversify investments.
Cash is a stable investment that provides steady returns. While the chance of losing money is remote, the returns tend to be the lowest of all asset classes. e.g. Bank deposits and short-term money market securities
Over the long-term, fixed interest tends to provide better returns than cash, but lower returns than property and shares. e.g. Securities such as bonds and debentures
Over the long-term, property tends to earn more than fixed interest or cash, but generally less than shares.e.g. Retail, commercial or industrial real estate
Infrastructure assets usually have low price volatility and steady investment returns similar to property investments. e.g. Investments in projects such as large scale public systems and services such as roads and airports
Over the long-term, alternative investments tend to earn more than property, fixed interest or cash, but fluctuate in value more in the short term, so they carry a medium to high level of risk. e.g. Hedge Funds and many private equity investments
Shares tend to earn the highest returns over the long term, but are more likely to fluctuate in the short term which makes shares a higher risk investment. e.g. Units of ownership in companies listed on a public share markets (such as the Australian Stock Exchange)
Investment returns to 31 March 2015
Accumulation Returns (net of fees and taxes)
|Quarter||Financial year to date|
|1 year||3 years||5 years||10 years|
Past performance may not be an indicator of future performance. The investment returns for the quarter and the financial year to date detailed above are real investment returns for the period shown, not annualised or ‘per annum’ returns which may differ from the numbers above.
|Inception date:||25 May 2010|
The sharp decline of various commodity prices drove market behaviour over the December quarter and significantly impacted Australian mining and resources companies. The other key change was halving the crude oil price since June 2014 due to surging US oil supply, weaker demand globally and Saudi Arabia’s refusal to cut production. This impacted a number of oil producing countries, in particular Russia with interest rates increasing by 6.5% to 17% in December. Conversely, the US economy showed strong economic growth, improved consumer confidence and solid labour force growth.
The quarter was also affected by continued slow global growth. Following Prime Minister Abe’s reelection, the Bank of Japan announced it would extend its quantitative easing program following more disappointing figures. Deflation put greater pressure on the European Central Bank to identify further stimulatory measures. Geopolitical concerns in Syria, Iraq and the Ukraine, along with the spread of the Ebola virus, also continued throughout the quarter.
The MSCI World ex-Australia Index (hedged into AUD) rose 4.1% over the quarter. The Australian Dollar depreciated against most major currencies and this resulted in a stronger return of 8.3% (in AUD) on an unhedged basis. The strongest performing developed market, in local currency terms, was Japan with the Nikkei up 6.7%.
The S&P/ASX300 Accumulation Index underperformed hedged overseas equities; 2014 saw the Australian equities (5.3%) lag significantly behind hedged overseas equities (13.2%). Small cap stocks significantly underperformed large cap stocks for the quarter with the S&P/ASX50 Accumulation Index returning 3.1% and the ASX Small Ords Accumulation Index retracting by 3.9%.
The Australian Dollar depreciated against most major developed market currencies, including the New Zealand Dollar, European Euro and British Pound, but appreciated against the Japanese Yen. The AUD depreciated 6.5% against the USD in the quarter, following a depreciation of 7.3% in the September quarter. The USD was amongst the strongest performing currencies on expectations of strong economic growth and the likelihood of US interest rates rising well ahead of Japan and the Eurozone.