Investment update for March 2019
Global growth continued to slow
Equity markets were accommodated by supportive central bank policies and the de-escalation in US/China trade tensions. Over the financial year to date, the US and Chinese equity markets generated solid returns, while Australia was soft, and the UK and Japanese markets have declined.
In the US, Federal Reserve Chairman, Jerome Powell announced a new outlook, after the March 2019 meeting. He said interest rates could be on hold for “some time”. This supported equity markets despite the backdrop of slower growth.
Within the Eurozone, Brexit remained an uncertainty, poised to impact markets and the economy.
The Chinese government’s focus on deleveraging was a major contributor to the decline in economic growth. Credit growth declined and shadow banking, specifically, contracted sharply. In addition, more recent trade restrictions began to negatively impact export growth and business investment.
The slowdown in China contributed to the deteriorating global economic environment. Europe and Japan trade and industrial production, particularly in the auto sector, was impacted. Policy in China moved to being more stimulatory and credit started to grow again.
Domestically, the RBA again affirmed the cash rate target of 1.5%. The Australian labour market remained strong with the unemployment rate at 4.9%. It is expected that a further lift in wages growth over time will occur if improvement within the labour market continues.
AvSuper Investments Team and our Board recently reviewed our investments. There have been new additions to International Shares and Real Assets to complement our existing portfolio and deploy a large cash reserve. The new managers enhance our diversification across the markets and hopefully provide higher returns in the low growth environment we are in and for the long term. We will continue to monitor the outcomes of our fund portfolio and make adjustments when opportunities arise for the best outcome of our members. The updated list of our current investment managers from April is on our website.
Please view our full investment commentary brought to you by our advisers – Frontier – for a more in depth analysis of market conditions this month. The monthly commentary can also be viewed on YouTube.
We trust you find this information useful in understanding how your AvSuper investment is being influenced and welcome your feedback on how we can improve the information we provide to you.