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Welcome to the July 2018 bulletin

Once again, we've had good investment performance for another financial year across each of our investment options. We've summarised the results below and of course there will be more detail in your annual member statements which will be issued to you in mid September.

Thank you to those of our members who recently participated in our annual member satisfaction survey – we look forward to sharing the results with you late in the year.
 

Michelle Wade,
CEO

Remember to scroll down to read our investment report, see our investment returns and see all the latest super news.


 

March 2018 Quarterly Investment Update

Concerns of trade tensions and tightening of monetary policy is a key risk

Global economic growth remains robust, but the theme of synchronised global growth appears to be changing. US economic growth remains strong and will benefit from fiscal stimulus over the near term. However, there are signs of deterioration in the outlook for Europe, and political uncertainty rising. In Japan, economic growth is also weakening.

Australia's headline GDP growth has been strong with business conditions remaining positive and employment growth being solid. However, there remain concerns with household debt levels, a softening in the residential property market and the Royal Commission providing uncertainty on credit growth.

Monetary policy has continued to tighten globally but remains very accommodative. The US Federal Reserve increased its interest rate during the quarter with expectations of future rate rises, however these may be relatively limited. The European Central Bank (ECB) announced it intends to end its quantitative easing program by December 2018 and interest rate rises are unlikely for some time.

Inflation and wage growth has remained relatively low but has risen slowly. Economic slack and labour market indicators continue to suggest inflationary pressures are building (particularly in the US) and if inflation starts to accelerate, central banks will be under pressure to raise rates faster than anticipated.

In China, fixed asset investment and credit growth are slowing. This is to be expected as the Chinese economy transitions and the Government targets deleveraging (particularly the "shadow banking" sector’s excesses). A China hard landing is a low probability as authorities have demonstrated the capacity and intent to stimulate the economy when required but for now there appears to be some cyclical slowing.


 

Sue Field
Investments Manager

Emerging markets, particularly currency, but also equity and debt markets, have been negatively impacted by the recent appreciation of the USD, rising US interest rates and concerns around trade. The impact has been largest in countries with current account and debt vulnerabilities such as Turkey, Argentina and Brazil, but negative sentiment and capital outflows have been broad based.

Trade tensions have been a major development over the quarter. The ultimate impact is difficult to forecast as there are a variety of flow through reactions including substitution, redirection of trade, supply chain management and foreign owned investment (e.g. Apple operating in China). Over the medium to long-term the US is expected to be negatively impacted by these actions and in the short-term any benefits could be offset by USD appreciation and retaliatory actions. Australia has a trade surplus with the US and therefore may be relatively less directly impacted, and although China is the major target the biggest impact is probably more likely to be felt by US neighbours Mexico and Canada, and other Asian countries (e.g. Vietnam, Malaysia, Thailand, Taiwan, South Korea and Singapore).


Investment Returns (net of investment fees and taxes) to 30 June 2018

Investment Option

Quarter

Financial year to date

5 years (annualised)

Growth (MySuper)#

3.6%

8.8%

8.8%

Conservative Growth

1.4%

4.4%

4.9%

Stable Growth

2.3%

6.1%

6.7%

Balanced Growth*

2.9%

7.2%

n/a

High Growth

4.5%

10.7%

10.6%

Australian Shares

7.1%

12.4%

10.3%

International Shares

2.2%

9.6%

10.7%

Cash

 0.4%

1.7%

2.2%

Past performance may not be an indicator of future performance.
# Your super will be invested in our Growth (MySuper) option if you don't make an investment choice.
* The Balanced Growth option was introduced on 1 July 2015
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. These returns are for accumulation options only.


Article: Is an AvSuper Income Stream of benefit?

The new financial year is a great time to think about whether an AvSuper Income Stream could be of benefit to you.

Did you know that income paid to you from an Income Stream is 100% tax-free from the age of 60 and that earnings on the investments in your account are also 100% tax free?

If you have reached your preservation age and retired or have celebrated your 65th birthday and are continuing to work, you qualify for the benefits of an Income Stream. You may also qualify for an Income Stream, if you have experienced a ‘change in your employment arrangements’ after the age of 60.

Income payments can be made from an AvSuper Income Stream fortnightly, monthly, quarterly, 6 monthly or annually – it’s up to what suits your lifestyle and financial needs. Recent changes to superannuation legislation have meant that the maximum amount permitted in Income Stream accounts is now $1,600,000 per person with this limit (Transfer balance cap) increasing in $100,000 increments in line with inflation.

If you would like more information or require assistance establishing an AvSuper Income Stream please phone 1300 128 751 or email avsinfo@avsuper.com.au.
 
 

News

Long term investing – on 1 July 1998, we appointed Loomis Sayles as an investment manager for our fixed income portfolio. 20 years later, we maintain a strong relationship with this manager and remind you that a long-term view is needed for investments, especially superannuation investments.

 

Contact us
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e. avsinfo@avsuper.com.au
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www.avsuper.com.au

 

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