2013 was a strong year for investment markets. The domestic share market returned 19.7%, while global shares returned 48.9% in Australian dollar terms. One dominant feature of the year was ongoing speculation regarding when the US Federal Reserve would reduce its $85 billion monthly bond buying program. In December, following stronger US economic data it announced that it would start reducing its purchases by US$10B per month to US$75B.
In other parts of the world, the new Chinese government stamped its mark with its policy measures, Europe continued its slow recovery, Japan undertook its own version of money printing, and growth in emerging markets slowed.
On the local front, the domestic equity market delivered a strong return despite some concerns around the slowing economy and the unemployment rate rising to 5.8%. Investors have increasingly been attracted to higher risk investment likes shares and property particularly as the cash rate now sits at a low level of 2.5%. Corporate earnings growth remains flat as the commodity boom slows, while the recent fall in the Australian dollar has provided some reprieve to trade exposed industries.
After several years of strong returns from government bonds, the asset class delivered low returns. The question facing investors now is how much further will yields rise as the Fed reduces its bond buying program. Inflation, however, remains low across most of the major economies.
Looking out for 2014, NESS Super continues to invest member funds with a long term approach in order to deliver on our objective of providing sound retirement benefits. We are mindful that equity markets have had strong returns in recent years, and are watching the impact of central bank policies. We will continue to work hard to invest wisely for the benefit of our members.
To view the latest investment returns and crediting rates for NESS Super and NESS Pension, please click on the link below: