What happened this Quarter
In September, Australian shares returned -6% and international shares returned -9%. This erased gains from July and August with shares in various sectors and regions posting flat to negative quarterly returns as of 30 September 2022.
Real estate investment trusts (‘REITs’) have been particularly challenged with the Australian -REIT index is down by -13.6% in September and -6.72% FYTD. Inflation has remained stubbornly persistent leading to continued interest rate hikes which have dampened the investor enthusiasm as seen in July and early August.
The Australian Dollar has continued to decline relative to the USD. Australian shares are mostly flat for the quarter while Australian bonds are down slightly for the quarter. The Australian economy remains strong with low unemployment; however, middle, and low-income consumers are feeling their budgets being stretched due to higher prices for goods, energy, rents, and mortgage rates.
NESS Continues to Protect Super Balances in Challenging Time
FYTD, the MySuper option has returned -0.87%. The fund remains diversified across a variety of different asset classes in a challenging environment.
The volatile economic environment appears likely to persist over the coming quarter. Near-term, investors are looking for indication from the RBA and US Federal Reserve that expectations for inflation and interest rates are beginning to moderate.
Slowing economic demand via higher interest rates will align with existing supply issues without tipping economies into recession is a balancing act. Once the outlook improves, increase in asset valuations should result in higher future returns.
Long-Term Return Prospects Still Looking Strong
Valuations across shares and fixed income assets have continued to become more attractive for investors with medium to long-term time horizons.
The NESS MySuper Option is designed to provide healthy high single-digit returns to members over time aiming to smooth the ups and downs of market cycles by reducing losses and capturing gains when markets rise.
The NESS investment team has put recourses into positioning the portfolio to protect its members against the mounting risks from the global economy be it inflation, recession, or an escalation in Ukraine/Russia war.
While downside protection over short-term time periods is important, growth assets will eventually trend upward and capture better long-term returns than fixed income or cash holdings.
|S&P/ASX 300 Index
|MSCI World ex Australia Index (Net)
|MSCI World ex Australia Index (Hedged) – A$ (Net)
|S&P 500 Index
|MSCI Europe Index (Net)
|MSCI Emerging Markets Index (Net)
|S&P/ASX 300 A-REIT Index
|Bloomberg Australian Composite Bond Index
Note: Returns are as of 30 September 2022 in AUD
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Things you should know
The information contained in this article is current at the time of its publication. However, some information may change over time. The content is for general information only and does not constitute personal advice. We recommend that you consult with a suitably qualified person before making any financial decisions. For more information on NESS Super, or before deciding whether to acquire or hold a product, consider if it is appropriate. See our Financial Services Guide (FSG), the relevant Product Disclosure (PDS) and the Target Market Determination (TMD).