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ANZ Smart Choice Super report: June 2020


Published 17 August 2020

Markets rebound but risks remain

ANZ Smart Choice Super Lifestage investment options' performance (%)

ANZ Smart Choice Super lifestage investment options 1 year performance graph

Investment Option

3 months

1 year

3 years (p.a.)

5 years (p.a.)

1940s

3.71

-0.14

 4.06

3.84

1950s

4.70

-0.45

 4.31

4.47

1960s

7.21

-1.74

 4.70

5.06

1970s

8.67

-2.53

 5.12

5.62

1980s

9.34

-3.02

 5.27

5.85

1990s

9.55

-2.93

 5.37

5.94

2000s

9.34

-2.96

 5.13


Note: Returns quoted use the unit price which is calculated using the net asset values for the relevant month end. Please note that all returns are after the deduction of investment fees. Reporting data is to 30 June 2020 (p.a. = per annum). Past performance is not a reliable indicator of future performance.  

(The inception of the 2000s fund is 18 February 2017 so there is no performance data available for five years.)

 

Based on their decade of birth, the table above shows how your employees' investment option has performed in the June 2020 quarter, and over the past one, three and five years.

ANZ Smart Choice Super’s Lifestage investment options were all positive during the June 2020 quarter as markets bounced back during April and May, with economies starting to reopen with the more growth orientated funds for the younger Lifestage options delivering a very strong performance.

Over the year to June, returns were between -0.1% and -3.0% for the Lifestage funds reflecting the considerable economic disruption of the COVID-19 pandemic and the global share market collapse in March. For more information on how the pandemic has impacted on investment performance in the June quarter, please read below for an update from the investment team.

 The SuperRatings survey groups funds together with similar allocations to growth assets. Against those funds with a higher allocation to riskier assets (generally above 80%) Smart Choice funds are around or above the median manager over 3 to 5 years, while SC funds with a lower exposure to growth assets around 70% (1960s cohort) are moderately below the median manager over this time period.

ANZ Smart Choice Portfolio Manager, Manish Utreja, said: “It’s important to remember that super is generally a long-term investment. History has shown time and again that markets have the ability to recover, as demonstrated by the recent rally, so we continue to look through the short-term market noise to help our clients grow and protect their retirement savings.”

Click on each heading below to see a particular fund's performance.


Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

1940s

  3.71

 -0.14

   4.06

 3.84


Note: Returns quoted use the unit price which is calculated using the net asset values for the relevant month end. Please note that all returns are after the deduction of investment fees. Reporting data is to 30 June 2020 (p.a. = per annum). Past performance is not a reliable indicator of future performance.


Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

1950s

4.70

-0.45

 4.31

4.47


Note: Returns quoted use the unit price which is calculated using the net asset values for the relevant month end. Please note that all returns are after the deduction of investment fees. Reporting data is to 30 June 2020 (p.a. = per annum). Past performance is not a reliable indicator of future performance.


Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

1960s

 7.21

 -1.74

 4.70

5.06


Note: Returns quoted use the unit price which is calculated using the net asset values for the relevant month end. Please note that all returns are after the deduction of investment fees. Reporting data is to 30 June 2020 (p.a. = per annum). Past performance is not a reliable indicator of future performance.


Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

1970s

8.67

-2.53

5.12

5.62


Note: Returns quoted use the unit price which is calculated using the net asset values for the relevant month end. Please note that all returns are after the deduction of investment fees. Reporting data is to 30 June 2020 (p.a. = per annum). Past performance is not a reliable indicator of future performance.


Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

1980s

9.34

-3.02

5.27

5.85


Note: Returns quoted use the unit price which is calculated using the net asset values for the relevant month end. Please note that all returns are after the deduction of investment fees. Reporting data is to 30 June 2020 (p.a. = per annum). Past performance is not a reliable indicator of future performance.


Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

1990s

 9.55

-2.93

5.37

5.94


Note: Returns quoted use the unit price which is calculated using the net asset values for the relevant month end. Please note that all returns are after the deduction of investment fees. Reporting data is to 30 June 2020 (p.a. = per annum). Past performance is not a reliable indicator of future performance.


Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

2000s

 9.34

-2.96

5.13

_


Note: Returns quoted use the unit price which is calculated using the net asset values for the relevant month end. Please note that all returns are after the deduction of investment fees. Reporting data is to 30 June 2020 (p.a. = per annum). Past performance is not a reliable indicator of future performance.

(The inception of the 2000s fund was on 18 February 2017 so there is no performance data available for five years.)

Diversification is important

Diversification is fundamental to ANZ Smart Choice Super’s dynamic Lifestage investment philosophy, which is used to build a portfolio across assets including Australian and international shares, cash, property and fixed interest securities, based on your age and time to retirement.

Returns across Lifestages explained

Younger members are more heavily invested in growth assets including shares. This means these members have seen their super balance most impacted by the market downturn caused by the COVID-19 pandemic over the year. That said, they have since seen strong performance as markets rallied during the June quarter.

Older members have seen less impact to their super balances over the year as they have more limited exposure to growth assets and more exposure to defensive assets like fixed interest and cash.

Our ANZ Smart Choice Super – smart investments tool is easy to use and explains how you are invested over time.

 

ANZ Smart Choice Super choose your own investment mix performance (%)

 

Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

Australian fixed interest^

0.66

3.28

4.23

Australian shares

14.62

-6.53

5.33

6.00

Global fixed interest

2.65

4.22

3.75

3.76

Global property

7.59

-15.45

-1.63

2.14

Global smaller companies

8.86

-3.25

4.94

5.76

International shares (hedged)

15.70

0.62

5.30

6.44

International shares (unhedged)

5.20

4.49

9.61

8.13

Cash

0.10

0.73

1.16

1.36

Conservative

2.95

0.49

3.66

3.55

Moderate

4.82

-0.61

4.36

4.58

Growth

7.22

-1.76

4.83

5.31


Note: Returns quoted use the unit price which is calculated using the net asset values for the relevant month end. All returns are after the deduction of investment fees. Reporting data is to 30 June 2020 (p.a. = per annum). Past performance is not a reliable indicator of future performance.

^ The ‘Australian fixed interest’ fund’s inception was on 18 February 2017 and therefore the five-year performance data is not available.
  The ‘Global smaller companies’ investment option is not available to members of ANZ Smart Choice Super and Pension.

Shares performed strongly in the quarter delivering returns of 15.7% for the international shares (hedged) option, 5.2% for the unhedged international shares option and 14.6% for Australian shares option.

As lockdown measures were relaxed, global property also staged a turnaround in the quarter and returns were up 7.6% in the global property option.

Defensive assets including cash and fixed interest didn’t perform as well as growth options during the quarter, so returns were more subdued in these options.

Members of ANZ Smart Choice Super can access the latest returns across the full suite of investment choices online or by visiting the ‘Investment portfolio’ page via their ANZ Smart Choice Super account in ANZ Internet Banking.

(Note: the above investment returns are not applicable to QBE members. These members can access their individual returns via ANZ Internet Banking.)

Market and economic snapshot

The COVID-19 health crisis is, first and foremost, a human tragedy but lockdown and isolation measures designed to control the spread of the virus have had destructive economic consequences at home and abroad. The negative effect on share markets has been swift and substantial. Large share market falls across most regions were seen in March, as supply chains were disrupted, and business activity was restricted to try and contain the pandemic. Shutdown measures squeezed companies’ turnover and profits, and damaged consumer confidence. 

Governments and central banks reacted swiftly to prop up economies with enormous fiscal and monetary responses. These response measures, along with some considerable success in flattening infection curves, have seen share markets in most major countries claw-back some of their large losses in the March quarter. As you can see in the graphs below, the US market in particular has bounced back strongly. 

The two graphs below show the performance of the S&P 500 Price Index and the ASX 300 Price Index from 1 January to 30 June 2020.

The Australian Share Market (ASX 300)

The US Share Market (S&P 500)

Source: Fact Set, IOOF

What may be ahead?  

While the share market has been buoyed by the promise of additional fiscal support and the fact that a return to work is already beginning to happen, we’re not ‘out of the woods’ just yet.

Four key risks remain, leaving the market vulnerable to possible setbacks.

1. A second wave

The global daily COVID-19 case count remains stubbornly high and trends are also up in emerging countries such as Brazil, India, Bangladesh, Indonesia and Saudi Arabia. The US has seen a surge in infections as lockdown restrictions were relaxed, possibly because reopening started before a sharp downtrend in new cases. Australia has also seen an outbreak centred in Victoria that is a meaningful second wave and has resulted in lockdown, a state of disaster declared and further economic damage

2. Economic damage

If countries need to delay reopening efforts to slow an escalation of infections, bankruptcies may surge, and unemployment could go even higher particularly as policy support starts to unwind later this year. That said, governments and central banks will likely offer further support which should provide some offset to the economic impacts of the pandemic.

3. Escalation of US-China tensions in US election year

Tensions between the two superpowers have continued to rise on the back of a swathe of issues, backdropped by the World Health Organisation’s agreement to run a COVID-19 inquiry. China’s introduction of a controversial security law in Hong Kong has also added to frictions. US technology shares could be vulnerable to Chinese retaliation because of their high dependence on China as both a manufacturing hub and a large source of revenue. And with an election nearing, US-China tensions may escalate further posing even more risks for markets.  

4. Delays in vaccine development

Meaningful progress is being made to develop and bring to market a number of vaccines around mid-2021. At this stage greater clarity regarding the effectiveness of current front runners should emerge by late 2020, most likely across multiple vaccines. However, time will still be required to: ensure lingering side effects do not develop; understand the length of time immunity lasts; and for manufacturing to ramp up. This suggests mid-2021 as a possible launch date if everything goes to plan. 

Investing in highly uncertain times

While there are clearly substantial risks still at play on the health, political, economic and geopolitical fronts, we are seeing considerable signs of improvement across key lead economic indicators that the worst of the initial decline in growth is now passing. However, it remains uncertain what growth will look like after the initial bounce and fiscal support starts to unwind, particularly if vaccines disappoint. 

It’s understandable if you feel anxious about your super in this challenging market environment. Expert guidance can help, so speak to a financial adviser about your investment strategy if you have concerns.

 

Need more information?

  1. Members can track their super balance by logging onto ANZ Internet Banking > click on super
  2. Help your employees learn more about gaining access to their super due to COVID-19.
  3. Help your employees find out how to ensure hasty decisions don’t erode their super.
  4. Read our COVID-19 FAQs.

 

Make superannuation simple and straightforward

Smart Choice Super performance

Article

ANZ Smart Choice Super report: March 2020
 

Strong performance over 2019 was challenged during the March 2020 quarter due to COVID-19. See the results.

ANZ Smart Choice Super report: September 2019
 

Sharp declines in global sharemarkets at the end of 2018 have impacted super returns.

Article

ANZ Smart Choice Super report: December 2019
 

Strong investment performance continues for the second quarter of the 2019/20 financial year.

ANZ Smart Choice Super report: September 2019
 

Sharp declines in global sharemarkets at the end of 2018 have impacted super returns.

Article

ANZ Smart Choice Super report: September 2019
 

The first quarter of 2019/20 financial year has been strong for super returns.

ANZ Smart Choice Super report: December 2019
 

Strong investment performance continues for the second quarter of the 2019/20 financial year.

ANZ Smart Choice Super report: September 2019
 

Sharp declines in global sharemarkets at the end of 2018 have impacted super returns.

“ANZ Smart Choice Super” is a suite of products consisting of ANZ Smart Choice Super and Pension (PDF 113kB)ANZ Smart Choice Super for employers and their employees (PDF 122kb) and ANZ Smart Choice Super for QBE Management Services Pty Ltd and their employees (PDF 124kb). The ANZ Smart Choice Super and Pension product is distributed by Australia and New Zealand Banking Group Limited (ANZ) (ABN 11 005 357 522). ANZ Smart Choice Super for employers and their employees and ANZ Smart Choice Super for QBE Management Services Pty Ltd and their employees are MySuper compliant products issued pursuant to the latest PDS available at anz.com/smartchoicesuper. ANZ Smart Choice Super is part of the Retirement Portfolio Service (the Fund) (ABN 61 808 189 263) and is issued by OnePath Custodians Pty Limited (ABN 12 008 508 496, AFSL 238346, RSE L0000673) (OPC), the trustee of the Fund. OPC is a member of the IOOF Group of companies, comprising IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. The Australia and New Zealand Banking Group Limited (ANZ) (ABN 11 005 357 522) brand is a trademark of ANZ and is used by OPC under licence from ANZ. ANZ and the IOOF Group of companies (including OPC) are not related bodies corporate. ANZ does not guarantee these products.

Before re-directing your super or moving your money into ANZ Smart Choice Super, you will need to consider whether there are any adverse consequences for you, including loss of benefits (e.g. insurance cover), investment options and performance, functionality, increase in investment risks and where your future employer contributions will be paid. 

This information is of a general nature and has been prepared without taking account of your personal needs, financial situation or objectives. Before acting on this information, you should consider whether the information is appropriate for you having regard to your personal needs, financial circumstances or objectives.

All fees are subject to change. Other key features are relevant when choosing a super fund, including performance.

Taxation law is complex and this information has been prepared as a guide only and does not represent taxation advice. Please see your tax adviser for independent taxation advice. The information on insurance cover is a summary only of the terms and conditions applying to the insurance cover. To the extent there is any inconsistency with the terms of the insurance cover provided by the insurer, the terms of the insurance policy will prevail.

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Fee Analysis: Research conducted by SuperRatings Pty Ltd, holder of Australian Financial Services Licence No. 311880. For a copy of the latest SuperRatings research, click here (PDF 452kB).

For more information, visit moneymag.com.au, selectingsuper.com.au and superratings.com.au SuperRatings does not issue, sell, guarantee or underwrite this product. Learn more about SuperRatings' criteria.