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Welcome to your July AvSuper bulletin

Content

 

 

Michelle Griffiths,
CEO


 

June 2013 Investment Update


Markets wobble on concerns of tapering of stimulus by US Fed

Over the quarter, much discussion has centred on Bernanke’s comments that the US Federal Reserve would consider scaling back its quantitative easing program if the US economy continued its recovery path. This reversed sentiment and caused a correction across a wide range of asset classes, notably in equities and bonds. In particular, the 10-year rates for US and UK Government Bonds spiked significantly on concerns that low central bank rates would not persist indefinitely.

During the quarter, the International Monetary Fund cut its forecast for global growth from 3.5% to 3.3%. US GDP estimates were revised down but domestic consumption, jobless claims and housing continued to show improvement. A continuing recession and a stubbornly high (above 12%) unemployment rate are inhibiting a rebound in European consumer and investor confidence despite the European Central Bank trying to provide confidence by promising to do ‘whatever it takes’.

Markets are becoming increasingly concerned about the robustness of Chinese economic growth. Poorer data for retail sales, manufacturing, corporate profits and general business activity contributed to a much more sombre outlook for China. Markets are also concerned about the Chinese shadow banking system expansion, lending standards and the subsequent spike in Chinese interbank lending rates. The emerging consensus is that Chinese growth will be lower than in the past. Thus, commodity prices and the Australian dollar all declined notably over the quarter.

The MSCI World ex-Australia Index (hedged in $A) was up 2.7% over the quarter. With the $A significantly weakening against all major currencies, unhedged returns (in $A) were much stronger at 15.5%.Despite markets slumping from mid quarter, the US (2.7%), Japan (10.3%), Germany (2.2%) and France (2.2%) posted solid returns over the quarter. All other developed markets generally struggled, with Greece (-10.1%), Hong Kong (-4.7%), Ireland (-4.8%) and Singapore (-4.3%) amongst the worst performers. Emerging markets returned 4.8% (unhedged in $A), underperforming developed markets due to weaker performance across the board, notably, from the major emerging market regions of Brazil, China and South Korea, Russia and South Africa. From a global sector perspective, Materials was the notable laggard due to weaker commodity prices. The Consumer Discretionary, Health Care and Telecommunications sectors performed strongly.

In a risk averse environment, the S&P/ASX300 Accumulation Index lost ground, underperforming global equities by a significant margin. Resources were once again the main detractor from the overall Index performance due to the Materials sector (-12.4%) significantly lagging the broader market. Small Resources were hammered, while large Industrials just managed to reach positive ground. Strong sector performance was achieved by the Consumer Discretionary, Health Care, Financials and Telecommunications sectors.

The recent market reaction to Bernanke’s ‘tapering of quantitative easing’ comments emphasize that the market recovery is still vulnerable to shocks and rapid changes in sentiment. For the time being, investor sentiment appears to be of the view that the recent market rally isn’t supported by earnings growth, or that there is a ‘weight of money’ moving from bonds to equities which will continue to support equity prices.

 

Scott Malpass
Investment Officer


 

Investment Returns (net of investemnt fees and taxes) to 30 June 2013 

Investment Option

Quarter

Financial year to date

3 years (annualised)

Growth #

2.9

18.7

9.6

Conservative Growth

1.3

9.2

7.7

Stable Growth

1.9

12.4

8.4

High Growth

3.6

25.0

11.9

Australian Shares

-1.4

26.5

9.5

International Shares

8.6

26.2

14.4

Cash

0.7

3.4

4.6

Past performance may not be an indicator of future performance.
# Your super will be invested in our Growth option if you don't make an investment choice.
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.
 

AvSuper News


MySuper now in place
As of 1 July 2013, our default investment option is the Growth (MySuper) option. For accumulation members, this is simply a rename of the existing Growth option and you don’t need to do anything. It does mean AvSuper can accept employer contributions under new laws which come into effect on 1 January 2014.

Your annual super statement and report are coming soon
You can log into
Member Online to select an electronic version instead of a hard copy if you prefer.

Our Automatic insurance was updated on 1 May 2013.

Thank you to all members who provided feedback on this extra cover. The cover is offered via an opt-out system because it provides better premiums for members. We tried to make it as easy as possible for members and hope the reply paid envelope and simple form helped.  

Stronger Super
Much of the Government’s Stronger Super package came into effect on 1 July 2013. There are many parts of this package so we prepared a
fact sheet outlining the changes and explain the potential impact on our members.  

Increased super!
From 1 July, the minimum superannuation guarantee (SG) rate is 9.25% - it will reach 12% by 2019.
 

IS advice launch

 

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This information is of a general nature only and does not take into account your personal objectives, situation or needs. Before making a decision about AvSuper, consider your requirements and the relevant Product Disclosure Statement (PDS). For a copy call us or download one from www.avsuper.com.au. AvSuper Pty Ltd (ABN 46 050 431 797,AFSL 239078) is the Trustee of the is the Trustee of the AvSuper Fund (ABN 84 421 446 069).

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