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ANZ Smart Choice Super report: March 2018


Published 8 May 2018

Your investments performed well over the past year, but 2018 has been challenging, explains Mark Rider.

In brief

  1. Investments recorded solid gains from April 2017 to March 2018.
  2. Sharp dips in the sharemarket in February and March 2018 lowered performance.
  3. Company profits support sharemarkets, but we expect higher volatility this year.
  4. Take a long-term view of your super and consider steps to boost your balance.

As Mark Rider, chief investment officer, explains in the video above, there's been plenty of turbulence in the sharemarket so far this year. However, we can tell you in this update on ANZ Smart Choice Super performance that despite those recent dips, your returns are tracked at a solid level in the 12 months to March 31, 2018.

As you can see in the table below, returns for the past 12 months ranged from 7.14 per cent for those born in the 1990s, through to 3.45 per cent for the more conservative 1940s investment option, in an environment where some global shocks reduced the value of shares in February and March 2018.

(Before we get into more detail, a quick reminder, it’s always a good idea to have a long-term view on your super – it goes up and down to some extent, but in the long-term tends to steadily track higher.)

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

Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

1940s

-0.49

3.45

2.63

4.02

1950s

-0.63

3.94

3.30

5.72

1960s

-1.09

5.28

4.16

7.03

1970s

-1.30

6.44

4.93

7.92

1980s

-1.39

6.99

5.29

8.41

1990s

-1.40

7.14

5.38

8.51

2000s

-1.37

6.88


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 March 31, 2018 (p.a. = per annum). Past performance is not a reliable indicator of future performance. The inception of the 2000s fund was on February 18, 2017 and therefore there is no performance data available for three and five years.

In the '1 year' column you can see how much your fund grew between April 2017 and March 2018. The '3 months' column shows returns for the first quarter of this year (January to March). In the last column, '5 years' you can see the average annual returns for the past five years.

Our members belong to investment options based on their decade of birth. Younger members' savings are mostly allocated to 'growth assets' (higher risk investments with higher potential returns), while 'defensive assets' (lower return investments with greater stability) make up a larger share as members age.

Why has the sharemarket dipped in the early part of this year, affecting superannuation performance?

Major sharemarkets around the world experienced a sharp dip in February 2018 when investors started selling stocks due to fears of rising inflation in the US. Then, in March, President Donald Trump’s move to raise trade barriers also shook markets and following that, major tech stocks fell in reaction to Facebook admitting a significant privacy violation.

The Australian sharemarket experienced similar dips, reacting negatively to the global news.

 

 

Shares

2018 has already been a bumpier ride than 2017. Global shares were buffeted when markets feared the US Federal Reserve would raise interest rates more quickly than anticipated, President Trump’s trade tariffs led to fears of a trade war and technology stocks were shaken on the back of Facebook’s privacy violation. Global shares finished the quarter down 2.3%.

 

US Shares

Began the year strongly, boosted by tax reforms but ended the quarter with the lowest returns since November 2017.

European Shares

Saw negative returns on the back of political uncertainty with no clear winner from elections in Italy. Worries over US rate rises and trade war fears also had an impact. 

Emerging Markets

Added to stellar gains over the past year despite a rise in market volatility, outperforming their developed counterparts over the quarter. The weaker US dollar for most of the quarter also helped boost performance.

Australian Shares

Underperformed as external factors overshadowed positive domestic news including encouraging economic data and a modest rise in commodity prices.

Fixed Interest (Bonds)

Signs of inflationary pressures initially sent bond prices lower and yields higher. However, softer economic growth in Europe and subsequent signs that inflationary fears would remain contained pulled yields lower towards the end of the quarter.

 

International Fixed Interest

Bond yields re-priced for growth, higher inflation and a more realistic number of US Federal Reserve rate rises.

Australian Fixed Interest

Outperformed the US as Australian inflation remained subdued and the domestic housing market showed clear signs of slowing meaning the RBA is in no rush to start raising rates. 

International Property

When bond yields rise quickly, other high yielding sectors such as listed property can come under pressure. This was one of the worst performing sectors this quarter.

Australian Dollar / US Dollar

The Australian dollar fell further. The gap between the RBA’s cash rate and the US Fed Funds rate continues to widen.

 

Source: JP Morgan & ANZ Wealth, 31 March 2018. Currency - Bloomberg & ANZ Wealth, 31 March 2018. All foreign exchange rates are rounded to two decimal places.

Index information: Global shares - MSCI World ex Australia Net Index (hedged to AUD) | US shares – US S&P 500 | European shares – MSCI Europe | Emerging market shares - MSCI Emerging Markets (Net) in AUD | Australian Shares - S&P / ASX 300 Accumulation | International Fixed interest – Bloomberg Barclays Capital Global Aggregate (hedged to AUD) | Australian Fixed interest - Bloomberg AusBond Composite 0+ Yr Index | International property – FTSE EPRA/NAREIT Developed Rental Index ex Australia (hedged).

This information is issued by OnePath Funds Management Limited (OFM) ABN 21 003 002 800 AFSL 238342. OFM is a wholly owned subsidiary of Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522 but is not a bank. The information is general in nature and does not take into account a potential investor’s personal needs, objectives and Financial circumstances. This information is not to be construed as investment or Financial product advice, and should not be relied upon as a substitute for professional advice. Before acting on this information, potential investors should consider the appropriateness of the information, having regard to their objectives, Financial situation and needs. Potential investors should read the relevant Product Disclosure Statement (PDS) available at onepath.com.au and consider whether the particular product is right for them. Although all the information in this document is obtained in good faith from sources believed to be reliable no representation of warranty, express or implied is made as to its accuracy or completeness. Whilst care has been taken in preparing this material, ANZ and its related entities do not warrant or represent that the information, opinions or conclusions contained in this document (“information”) are accurate. To the extent permitted by law, ANZ and its related entities do not accept any liability from the use of the information. Past performance is not indicative of future performance. The value of investments may rise or fall and the repayment of subscribed capital is not guaranteed.

I’m in the choose your own investment mix. How did my funds fare?

With the exception of the global property option, ANZ Smart Choice Super members who chose their own investments generally saw positive returns for the 12 months ending March 2018. (Results for the different assets are in the table below.)

The best performing investment was the global smaller companies option, which delivered a 13.24 per cent return. This was followed by international equities (unhedged) at 11.79 per cent for the year to March 31, 2018 and international equities (hedged) at 9.58 per cent.

For those in multi-asset options, the annual returns ranged from 2.96 per cent for the conservative fund through to 5.8 per cent for the growth option.

ANZ Smart Choice Super choose your own investment mix performance %

Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

Cash

0.34

1.37

1.62

1.92

Conservative

-0.29

2.96

2.40

3.63

Moderate

-0.69

4.22

3.54

5.78

Growth

-1.09

5.80

4.56

7.39

Australian equities

-3.08

3.33

4.24

7.48

International equities (hedged)

-2.17

9.58

7.55

10.97

Global property

-5.25

-0.32

2.24

6.69

Global fixed interest

-0.09

2.10

2.26

3.58

Australian fixed interest

0.58

2.23

Global smaller companies

1.18

13.24

International equities (unhedged)

0.64

11.79


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 March 31, 2018 (p.a. = per annum). Past performance is not a reliable indicator of future performance. Note the Australian Fixed Income fund’s inception was on 18th February 2017 and therefore the three and five year performance data is not available. Similarly, International Equities (unhedged) and the Global Smaller Companies started on the 25th May 2015 so the three and five year performance data is not available. The Global Small Companies investment option is not available to members of ANZ Smart Choice Super and Pension.

 

Members of ANZ Smart Choice Super for employers and their employees 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.)

How is your super tracking?

 



Mark Rider
Mark Rider is ANZ Wealth’s chief investment officer, responsible for delivering an overarching investment strategy, including asset allocation, investment themes, investment manager and product selection and monitoring for ANZ Wealth in Australia. Before joining ANZ in 2013, Mark spent 15 years at UBS and 10 years at the Reserve Bank of Australia, making him a well-recognised and respected member of the Australian investment community.

 

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ANZ Smart Choice Super is a suite of products consisting of ANZ Smart Choice Super and Pension, ANZ Smart Choice Super for employers and their employees and ANZ Smart Choice Super for QBE Management Services Pty Ltd and their employees (together ‘ANZ Smart Choice Super’). ANZ Smart Choice Super and Pension is a retail product issued pursuant to a Product Disclosure Statement (PDS). ANZ Smart Choice Super for employers and their employees and ANZ Smart Choice Super for QBE Management Services Pty Ltd and their employees are both MySuper compliant employer products issued pursuant to a separate PDS for employer plans and PDS for QBE.

ANZ Smart Choice Super is issued by OnePath Custodians Pty Limited (OnePath Custodians) ABN 12 008 508 496, AFSL 238346 and distributed by Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522. ANZ is an authorised deposit taking institution (Bank) under the Banking Act 1959 (Cth). OnePath Custodians is the issuer of ANZ Smart Choice Super but is not a Bank. Except as set out in the relevant Product Disclosure Statement (PDS), this product is not a deposit or other liability of ANZ or its related group companies. None of them stands behind or guarantees the issuer or the capital or performance of any investment. Such investment is subject to investment risk, including possible repayment delays and loss of income and principal invested. Returns can go up and down. Past performance is not indicative of future performance.

ANZ Smart Choice Super and Pension received a Gold rating in SuperRatings’ 2019 product rating in both the Super and Pension categories. ANZ Smart Choice Super for employers and their employees received a Gold rating in SuperRatings’ 2019 MySuper product rating. SuperRatings does not issue, sell, guarantee or underwrite these products. Go to www.superratings.com.au for details of its ratings criteria.

This information is of a general nature and has been prepared without taking account of your objectives, financial situation or needs. Before acting on this information you should consider whether the information is appropriate for you having regard to your objectives, financial circumstances or objectives. ANZ recommends that you read the ANZ Financial Services Guide, the relevant Product Disclosure Statement, product and other updates which are available by calling Customer Services on 13 12 87, or visiting our website here or here (for employer members), and consider whether the product is right for you before making a decision to acquire or to continue to hold the product. 

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. 

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 exit fees, other 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.

ANZ does not represent or guarantee that access to ANZ Internet Banking or the ANZ App will be uninterrupted. Temporary service disruptions may occur. ANZ recommends that you read the ANZ App Terms and Conditions available at anz.com and consider if this service is appropriate to you prior to making a decision to acquire or use the ANZ App. The ANZ App is provided by Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522. Super, Shares and Insurance (if available) are not provided by ANZ but entities which are not banks. ANZ does not guarantee them.

In addition to their salary, ANZ staff members may receive monetary or non-monetary benefits depending on the product they are selling or providing advice on. You may request further information from ANZ. Other key features including insurance, available investment options and performance, exit fees and functionality are relevant when choosing a super fund. 

This information may be subject to change. Updated information will be available free of charge by calling Customer Services on 13 12 87.