Welcome to your October bulletin

Following on from our good investment performance for year ending 30 June 2013, it is pleasing to see the new financial year open consistently and strongly with positive investment returns across each of AvSuper's investment options for the Sept 2013 quarter, as detailed in our Investment Officer's Report below.

By now, each of you will have received your annual member statement and Trustee Report to members and once again I urge you to read this material carefully as it provides important information about your superannuation savings and the many benefits enjoyed by AvSuper members.

More recently, you will have also have received our advice about upcoming improvements to our insurance arrangements for members.  Unlike some other super funds which have recently increased the cost of their insurance, AvSuper has been able to maintain our competitive pricing while also providing additional insurance benefits to many AvSuper members.

Don't forget, if you have any queries about your insurance, member statement, retirement planning or any other aspect of your AvSuper membership, we have a team of experienced Member Advice Consultants who can help.

September 2013 Quarterly Investment Update

A series of two-act plays

After spooking markets in June with indications of a potential tapering of the US asset purchasing program, US Federal Reserve Chairman Bernanke attempted to ease market concerns by moderating his earlier words, then surprised markets by deciding in September to delay tapering thus providing strong support to growth assets. Investor sentiment was also spooked early in the quarter by the escalating crisis in Syria and the possibility of a US led intervention. In Europe, better than expected economic data supported markets early in the quarter, however, structural issues remain and a political storm in Italy (resolved post-quarter end) reminded investors of the risks.

The sustainability of Chinese growth was questioned early in the quarter as markets grew concerned following sub-par economic data releases and revelations about the instability of the country’s shadow banking system. However, later economic data releases were ahead of market expectations and caused a rally in assets leveraged to commodities. As expected, sentiment in Australian markets was closely aligned with the Chinese growth outlook. In August the RBA cut the official cash rate to a post-war low of 2.5%, however, consumer and business confidence improved late in the quarter and household wealth benefited from the strong performance of the residential property and domestic equity markets.

The MSCI World ex-Australia Index (hedged in to $A) was up 7.0% over the quarter. While all developed market countries produced a positive absolute return, Singapore, UK and Switzerland lagged on a relative basis. Emerging markets returned 3.7% (unhedged in $A), underperforming developed markets due to weaker returns from Indonesia, Mexico and India. From a global sector perspective, Materials, Industrials and Consumer Discretionary were the strongest performers, while Consumer Staples and Utilities were the laggards.

Better than expected economic data releases in China led Australian equities higher with the S&P/ASX300 Accumulation Index returning 10.3%. Materials (16.4%) was the strongest performing sector while the Consumer Discretionary, Energy, Industrials and Financials sectors all produced positive double-digit returns. Small caps returned 14.9%, outperforming large cap stocks due to the re-rating of small cap Resources stocks that resulted in this segment of the market returning 22.4%.

AvSuper News

Annual statements and reports have been sent to all members to help you stay informed about the progress of your retirement savings. We strongly recommend you read your statement, and all the attachments, and please let us know as soon as possible if you think there are any errors or your hasn’t arrived by the end of October.

Improved AvSuper insurance - from 1 November 2013, many members will receive more cover for the same premiums and professional pilots can apply for TPD cover. Other improvements are an increase in age for voluntary TPD cover, a choice between fixed and variable cover, and some definition updates. Full details are available via our website.