20.62% Top Quartile (MySuper) Return
1-year net# return ended 30 June 2021*
It has been an exceptional year for equities growth and return. This is reflected in AvSuper’s Growth (MySuper) Option which returned 20.6% for the year. This is the highest rolling one year return in AvSuper’s 30-year history. The Growth (MySuper) option returns over the longer period continue to be strong at 7.9% over three years, 8.7% over five years and 8.4% over ten years*.
AvSuper also performed well overall in peer rankings. The Growth (MySuper) option performance was well above median for all MySuper funds. Our Cash and High Growth options are both in the first or second quartile against peers from one year through to ten years. Whilst our primary focus is to achieve our investment objective for each option, we remain aware of how we are tracking relative to similar funds’ performance. We do this to ensure we are providing competitive outcomes for our members.
The large losses sustained in the 2020 financial year have generally been recovered. Notably our Australian (23.6%) and International Equities (26.9%) and Private Markets (21.0%) sectors did extraordinarily well this year. We were pleased with our alternatives sector which includes hedge funds (8.03%).
However, the low interest rate environment had a big impact on cash (0.38%) and fixed income (1.6%) returns, noting that fixed income and interest rates in general are staying at historically low rates. We continue to watch the US Federal Reserve for signs of rate increases or inflationary pressures, which will in turn force all other central banks down the same path.
During 2020-21, AvSuper undertook a number of changes to further improve our investment performance. We amended the Growth option’s Strategic Asset Allocation and adjusted its equity manager line up. This included adding new investment managers, Hyperion (Australian Equities), Baillie Gifford (International Equities) and Flexstone (Private Markets). The alternative investments sector was also updated. These investments provide diversification and are not directly aligned to share markets, so often provide a buffer against short term fluctuations.
Additionally, unit pricing moved from weekly to daily on 30 November 2020. This allows for ease of switching for members and increased pricing transparency.
Your Future Your Super
July 2021 sees the commencement of the Your Future Your Super (YFYS) laws, originally announced in the October 2020 Federal Budget and legislated in late June 2021. Among the changes is a retrospective investment performance test for MySuper products.
The test looks at the last seven years’ performance* for each MySuper option and compares that to a legislated benchmark for the Strategic Asset Allocation (SAA) for that option. If the performance over seven years is more than 0.5% under the benchmark, then the fund has ‘failed’ the test, regardless of individual fund circumstances. In targeting our stated investment objective for each option, AvSuper has historically been prepared to take less risk than the stated long-term SAA if we determined it to be in members’ interest. While this approach mitigates risk, it may mean a lower return than would be returned by the SAA.
With the markets at all-time highs, the outlook for 2021-22 is mixed and will depend on the ongoing pandemic situation. Going forward, we expect global growth to be around 5% due to the pent-up demand for spending resulting from the savings incurred during the pandemic lockdowns around the world. This will continue for the next year or so until spending returns to normal levels as the pandemic becomes under control.
AvSuper is looking forward to the challenges and opportunities in 2021-22 and continuing to provide you long-term returns with an acceptable level of risk.
* Remember that past performance is not always a reliable indicator of future performance
# Net of investment fees and taxes