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ANZ Smart Choice Super report: December 2018


Published 14 February 2019

Sharp declines in global sharemarkets at the end of 2018 impacted super returns, explains Mark Rider.

ANZ Smart Choice Super lifestage investment options' performance (%) to December 31

Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

1940s

-2.15

1.47

3.39

3.89

1950s

-2.74

1.04

4.17

4.88

1960s

-4.86

-0.39

4.96

5.53

1970s

-6.29

-1.18

5.68

6.05

1980s

-6.96

-1.53

6.01

6.35

1990s

-7.11

-1.56

6.10

6.42

2000s

-6.91

-1.61


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 December 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 so there is no performance data available for three and five years.


As you can see in the table above, investment returns for lifestage funds – which most ANZ Smart Choice Super members are invested in – fell in 2018 due to a ‘correction’ in global markets at the end of the year.

Investors around the world were affected by the sharp dive in the sharemarket from October to the end of December. This includes almost all Australian superannuation account holders. Sharemarket performance is very important in determining whether super funds get strong or weak results.

Since then, it's worth noting that across January and February in 2019 the sharemarket has recovered much of the loss caused by the correction in the final three months of 2018, with annual returns across all lifestage options in positive territory as at the end of February.

Sharemarket weakness in 2018 was largely due to lower expectations of listed companies’ earnings especially in the US. Aside from that, there were a range of factors pushing against share values such as the US-China trade war, Brexit and Australia’s falling property prices.

Keep in mind that the sharemarket has posted strong growth in the past 10 years and that after a very strong 2017, we were due for some volatility. If you look at sharemarket performance over 10, 20 or 30 years, it does have a strong upward trend.

In the graph below you can see the Australian sharemarket performance (for the biggest 200 companies) over the past 20 years. There is a clear upward trend, with the big decline in 2008 being the global financial crisis. The sharemarket correction late last year is the small dip you can see right at the very end of the graph.

Only very short-term investors would make decisions based on the dip we saw at the end of last year: here’s a quick read on how you should approach a volatile market.


Data source: FactSet

Why older members got better results

What you’ll also notice in the table at the top of the page is that older members’ options performed better than younger ones’ options.

Lifestage members are in investment options based on their decade of birth. Younger members’ savings are mostly allocated to ‘growth assets’, which are higher risk investments with higher potential returns. Older members are mostly allocated to ‘defensive assets’, where more stable, lower return investments make up a larger share of their portfolio.

But what really matters is how your investment performs over the long term. While results in 2018 were far from great, take a look at the graph below, which gives you a five-year (2014-18) perspective on how your super investments have performed.

 


Source: ANZ Smart Choice Super


It is very important to look at super as a long-term investment. Consider that much of the loss caused by the sharemarket correction at the end of last year has already been recovered in the market rally of January and February 2019.  


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

Due to the sharemarket correction late in 2018 there were negative returns for several asset classes, though defensive assets such as fixed-interest (e.g. bonds) had a positive result.

ANZ Smart Choice Super choose your own investment mix performance (%) to December 31, 2018

 

Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

Cash

0.34

1.37

1.48

1.75

Conservative

-1.38

1.53

3.14

3.61

Moderate

-3.08

0.83

4.35

5.01

Growth

-5.14

-0.55

5.36

5.81

Australian equities

-7.23

-1.89

6.62

5.74

International equities (hedged)

-12.39

-6.97

6.18

6.53

Global property

-5.58

-3.48

2.76

6.81

Global fixed interest

1.34

0.96

2.57

3.70

Australian fixed interest

1.79

3.19

Global smaller companies

-14.06

-3.73

6.33

International equities (unhedged)

-10.10

1.36

6.69


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 December 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 February 18, 2017 and therefore the three and five-year performance data is not available. Similarly, ‘international equities (unhedged)’ and the ‘global smaller companies’ started on May 25, 2015 so the 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 (PDF 111kB) 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?

  1. Check your super balance by logging onto ANZ Internet Banking > click on super
  2. Learn more about growing your super here
  3. Check how much super you should have to be on track by reading our how does your super compare series of articles.

 

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OnePath Custodians Pty Limited (OnePath Custodians) ABN 12 008 508 496, AFSL 238346, RSE L0000673 is the trustee of the Retirement Portfolio Service (ABN 61 808 189 263, RSE R1000986) (Fund) and issuer of the interests in “ANZ Smart Choice Super”, a suite of products consisting of ANZ Smart Choice Super, ANZ Smart Choice Super for employers and their employees and ANZ Smart Choice Super for QBE Management Services Pty Ltd and their employees.

ANZ Smart Choice Super is issued by OnePath Custodians and distributed by Australia and New Zealand Banking Group Limited (ANZ) 11 005 357 522. ANZ is an authorised deposit taking institution (Bank) under the Banking Act 1959 (Cth). OnePath Custodians is the issuer of this product but is not a Bank. Except as described in the relevant Product Disclosure Statement, the obligations of OnePath Custodians are not deposits or liabilities 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.

This information is subject to change. You should read the relevant Financial Services Guide (FSG), PDS, product and other updates (for open and closed products) available at ANZ.com.au/super and consider whether the product is right for you before making a decision to acquire, or to continue to hold the product. Updated information will be available free of charge by calling Customer Services on 133 665.

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