AvSuper News

EOI Update

At AvSuper we have been busy assessing potential merger partners as well as making changes to insurance as a result of Hannover exiting the market.

Here is a short video explaining more about the Expression of Interest (EOI) and the insurance changes. You can also read further details below.

 

EOI Update

We were delighted to receive a strong response to our EOI.  

The next step is for the merger committee to assess the proposals and form a short list for the board to review, which we expect to happen in the coming weeks.

We are unable to provide a list of funds as Non-Disclosure Agreements have been signed with each participant. However, we can confirm that the response quality is high, and we will assess each submission on its merits as we consider who and what will best serve our 6000 members in the years ahead.

 

Insurance change in more detail

AvSuper’s current insurer, Hannover, announced last year that it would be withdrawing from the superannuation market in 2022. The transition to our new insurer, AIA is well progressed and due for completion by the end of the quarter.

Click here to read the Significant Event Notice, that sets out the changes you can expect.

If you have any questions about your level of cover, please get in touch.

 

Introducing our newest team members

Over the Christmas period, we had two new staff join AvSuper. Kathryn Stanfield came on board as an Administration Officer, and we welcomed Angela Oplantzakis as our Administration and Communications Manager.

We also would like to welcome David Coogan as our new independent Director, replacing Julie-Anne Schaefer who finished up in November. David brings a wealth of experience in the superannuation industry, and will be joining our board in March.

 

Questions

If you have any questions about any of the above, please get in touch on 1300 128 751 or email us avsinfo@avsuper.com.au.

We will continue to keep you informed as the year progresses.

Investment Update – March 2022

The first few months of 2022 have seen substantial volatility in the financial markets driven by a number of headwinds, including the ongoing effects of  the pandemic,  the geopolitical tensions and conflict in Ukraine and locally natural disasters such as bushfires, hail, and major floods.

If you are watching your super regularly, then you may have noticed some of this volatility reflected in daily unit prices. While this can be disconcerting, it’s most important to remember that superannuation is a long-term investment. AvSuper is able to utilise its investment managers and their broad research, to actively monitor this volatility and manage both opportunities and risks to your investments. 

Recent events

The Russian invasion of Ukraine is the biggest European conflict since 1945.  There have been a tranche of sanctions announced against Russia with the likelihood of more to come, and continued economic and market uncertainty as the war unfolds.

While AvSuper has very little direct exposure to Russia and Ukraine, some of the broader economic challenges for markets remain a concern.

On top of sanctions, the rise in oil prices to over $100 a barrel, and the rapidly increasing price of natural gas as a result of the disruption of Russia’s supply of natural gas to the EU will both impact the world economy.   These higher energy prices are what economists call a supply shock, which drives inflation and dampens economic growth.

The US is also showing signs of the potential for recession later this year or early next year with inflation at a 40 year high. Stagflation is a real concern in the US with high inflation and high unemployment possible. U.S. manufacturing activity slowed to a one-year low in December on the back of constraints on supply chains arising from the pandemic.  

AvSuper has been consulting with its investment managers to understand the potential forecasts ahead, with interest rate rises clearly on the FED and RBA agenda for 2022.  Expectations are that at least 1-2 rate rises will occur this year in Australia as the target band of inflation (2-3%) is exceeded.

AvSuper investments

AvSuper remains focussed on decisions in the best interest of members during any crisis, including long-term strategies and outcomes. In times of uncertainty, member and investor overreaction frequently create market anomalies with temporary stress often compelling investors to make uninformed buy/sell decisions, creating investment opportunities.

We understand that members will have concern for the Russian invasion and how that affects share market volatility and the balance of your superannuation and income stream accounts.  At this point markets will already have assessed the current crisis and priced that into expectations.  

It’s important to note, that during the recent Covid 19 lockdowns and during the Global Financial Crisis (GFC), any members who switched into cash, were typically worse off in the longer term as losses were locked in and the market uplift to follow was not foreseen. 

The following chart shows the possible effect of switching to Cash after a market fall – the GFC in this case. It is based on an average member with a starting balance of $50,000, invested in a median balanced/growth fund and receiving 9.5% SG contributions thereafter*:

Descriptor

Behaviour

Balance after 10 years

Stressed 

moves to Cash and never returns to the default option

$126,893

Anxious 

moves to Cash option and returns to the default option after 2 years

$189,065

Timer 

moves to Cash then returns to the
default option after 1 year

$193,624

Trusting (green)

remains in the default option

$207,463

* Assumptions for the table and chart provided by Frontier Advisors Pty Ltd are as follows:
– starting salary of $50,000, increased 2.5% pa for inflation
– starting balance of $50,000
– SG contributions from employer at 9.5% of salary
– returns at SR50 Balanced
– it is a historical calculation so the chart is not necessarily in inflation adjusted dollars

Therefore, before making a switch, it’s important to consider the reason, and does it fit with your long-term goals.

Whilst there is the potential for more short-term losses and the possibility of negative returns, we note that in any crisis, there will be buying opportunities.

Market movements

Investment markets globally have had small declines in response to the Russian invasion. The US equity market (S&P 500) produced positive returns since the start of the invasion. However, the very large corrections to date have been confined to the direct parties, Russian and Ukrainian equities, bonds, and currency.

  • Russia constituted less than 0.5% of the World equity market, and less than 3% of the emerging markets equity index.
  • Russian and Ukrainian bonds represented less than 4% of the emerging markets bonds index.

Although different on each occasion, the recent experience on investment markets of major geopolitical events has been that after the initial negative reaction, equity markets after six months had generally recovered and in some cases produced strong positive returns.

Market outlook

It is tough to make a high conviction call on the direction of investment markets from here. At the moment it is very difficult to design investment strategy to the possible outcomes from the conflict, however we are confident that the portfolio is significantly diversified to weather this volatility. We will continue to position AvSuper’s portfolio prudently to perform across a range of scenarios, rather than making a heroic call on the outcome.

Call us for personalised financial advice on your AvSuper investment option if you think you need to.

If you have an AvSuper accumulation or income stream account, you can choose how your super is invested, allowing you to influence your investment risk to suit your needs and situation. There are nine investment options to choose from (including Cash as one of three specific asset class options), and you can choose more than one investment option for your money. You can invest your current balance differently to any future contributions.

The best option for you depends on your investment objectives, investment timeframe, age, attitude to investment risk and personal circumstances. Please note that past performance is not always indicative of future performance.

We recommend you read our Member Investment Choice (MIC) Guide or Product Disclosure Statement (PDS) and consider your options carefully.

Investment performance update – December 2021

We want to take this opportunity to thank our members for their continued support for AvSuper and wish you all a very Happy Christmas and a safe and enjoyable new year.   Rest up for that well deserved break and look forward to a prosperous new year ahead.

Welcome to our latest investment performance update as we head towards the end of the 2021 calendar year. The following table summarises our performance up to November 2021 against each of the options’ investment objectives.

Accumulation returns to 30 November 2021 against Investment Objectives

All investment options exceed their stated investment objectives for the current year with the exception of the International Shares Option.

Comparative Investment Performance

The above information is based on the 31 October 2021 Rainmaker survey results. November 2021 results are not yet available.

The Growth (MySuper) Option remained in the second quartile position compared to other super funds during the September quarter performing at 20.83% net of investment on a one-year basis to 31 October 2021 net of investment fees. This option achieved well above its target objective of 6.62%.

The High Growth Option continues to shine, returning 17.4% net of investment fees on a one year basis and 11.3% over ten years. The Diversified Index Option tracks the index of the Australian shares, International shares and the bond index and this option has also performed well with 12.8% net of investment fees on a one year basis.

For income streams, the Stable Growth Option achieved above median results and held its second quartile position against other super funds. This option returned 8.6% net of investment fees on a one-year basis to 30 November 2021, well above our target objective of 5.0%.

What else can you do?

You can keep your AvSuper savings strategy on track by

  • reviewing your investment mix – remember we have nine options to choose from and there is no fee to switch options. You can choose different options for your savings and future transactions to best suit your needs and circumstances.
  • stay in touch with investment news – read our monthly commentary and fact sheets
  • talk to our friendly member service team about AvSuper and your investment options
  • book a time with our qualified financial planners to ensure your investments are working towards your financial goals.

 

Note: The AvSuper Growth (MySuper) option was assessed as underperforming in the 2021 YFYS Annual Performance Assessment (APA). Click here to read more.

AvSuper introduces a fee cap!

We are delighted to announce that an administration fee cap now applies to all of our member accounts.

hand holding Australian currencyThis means that each financial year, starting from 1 July 2021, you will pay no more than $1,000 in percentage-based administration fees plus $1.15 per week or membership. There is nothing you need to do – we will monitor accounts and adjust the fees when the $1,000 cap is reached.

Accordingly, all of our product disclosure documents (PDSs) and member guides have been updated as of 1 October 2021.

As previously notified to members, our Growth (MySuper) option has a new strategic asset allocation (SAA) from 1 October and this is also incorporated into our new PDSs and guides.

If you have any questions about the fee cap, our new asset allocation or your AvSuper membership, please contact us.

We look forward to serving you, 

Michael

Michael Sykes
CEO

 

 

Note: The AvSuper Growth (MySuper) option was assessed as underperforming in the 2021 YFYS Annual Performance Assessment (APA). Click here to read more.

Older news

Investment Update – March 2022

The first few months of 2022 have seen substantial volatility in the financial markets driven by a number of headwinds, including the ongoing effects of  the pandemic,  the geopolitical tensions and conflict in Ukraine and locally natural disasters such as bushfires,...

Investment performance update – December 2021

We want to take this opportunity to thank our members for their continued support for AvSuper and wish you all a very Happy Christmas and a safe and enjoyable new year.   Rest up for that well deserved break and look forward to a prosperous new year ahead. Welcome to...

Phone 1300 128 751 (Local call)
Email:
avsinfo@avsuper.com.au