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ANZ Smart Choice Super report: December 2019


Published 28 February 2020

Strong investment performance continues

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


Investment Option

3 months

1 year

3 years (p.a.)

5 years (p.a.)

1940s

0.20

10.59

5.71

4.68

1950s

0.55

12.08

6.38

5.67

1960s

1.48

15.83

7.87

6.96

1970s

1.99

18.41

9.01

7.95

1980s

2.26

19.70

9.56

8.44

1990s

2.31

19.87

9.67

8.53

2000s

2.20

19.24


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 31 December 2019 (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 three and five years.

 

Based on your decade of birth, the table above shows how your employees investment option has performed in the December 2019 quarter, and over the past one, three and five years.

Smart Choice Super’s Lifestage investment options continue to perform strongly for members over the year to December with returns ranging from around 11% for the more defensive funds to above 19% for the more growth orientated options. The solid returns have been driven by strong performance in particular from Australian and global shares, and global property and infrastructure. Please read below for a market and economic snapshot for the December quarter.

According to estimates from SuperRatings, 2019 was the best year for Australian super funds in six years. That said, returns in 2018 were weak and to a considerable extent 2019 marked a rebound from the late 2018 gloom. The recovery in returns was supported by central banks’ easing policy and emerging signs that the slowdown in the global economy has based with indications that a recovery is building.

The SuperRatings survey groups funds together with similar allocations to growth assets. Within these sections of the survey, returns have been strong over the year to December, with our lifestage investment options from 1960s to 2000s performing well above the median manager.

ANZ’s Chief Investment Officer, Mark Rider, said: “The sharemarket had stellar returns in 2019, typically between 20% and 30%, rallying on expectations of better economic growth supported by central bank easing, which began to appear at the end of last year.”

 


Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

1940s

0.20

10.59

5.71

4.68


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 31 December 2019 (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

0.55

12.08

6.38

5.67


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 31 December 2019 (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

1.48

15.83

7.87

6.96


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 31 December 2019 (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

1.99

18.41

9.01

7.95


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 31 December 2019 (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

2.26

19.70

9.56

8.44


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 31 December 2019 (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

2.31

19.87

9.67

8.53


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 31 December 2019 (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

2.20

19.24


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 31 December 2019 (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.

Diversification is important

Diversification is fundamental to ANZ’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 continued to receive higher gains because they are more heavily invested in ‘growth assets’, such as shares. These assets tend to earn the highest returns, but as markets can also fall, it is possible for investors (that is, super fund members) to lose out when they do. For younger members, there’s time to recover from periods of volatility, whereas that may not be the case for older super members.

Don’t forget our ANZ Smart Choice Super – smart investments tool is easy to use and explains how your employees 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^

-1.17

5.75

Australian shares

0.71

21.89

9.99

8.81

Cash

0.20

1.13

1.29

1.52

Conservative

0.05

8.68

4.84

4.11

Global fixed interest

-0.85

6.15

3.24

3.24

Global property

0.23

20.03

6.93

6.79

Global smaller companies

4.84

23.47

9.91

Growth

1.52

16.07

8.12

7.29

International shares (hedged)

6.75

23.66

10.58

8.84

International shares (unhedged)

3.81

25.08

12.35

Moderate

0.60

12.33

6.54

5.83


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 31 December 2019 (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 three and five-year performance data is not available.
The ‘global smaller companies’ and ‘international shares (unhedged)’ funds started on 25 May 2015 so 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.

International shares (hedged) were the best performer over the quarter with Australian shares, and Australian and international fixed interest ending the year more subdued. However, over the year to December, Australian and international shares and fixed interest, and global property all performed strongly, driving strong returns for Smart Choice members.

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.)

Market and economic snapshot

The final quarter of 2019 capped off a strong year of returns for investors.  While returns were very strong through 2019, the economic backdrop continued to slow. The divergence can largely be explained by the US Federal Reserve easing policy three times and other central banks including the Reserve Bank of Australia (RBA) also acting to support growth and lift inflation.

To a considerable extent the soft returns in 2018 had already captured the 2019 slowdown and policy easing reduced recession fears and boosted returns even as earnings remained soft. Global shares finished the year very strongly with emerging market shares joining in the rally as growth prospects in 2020 started to improve. Australian shares finished the year somewhat more subdued following strong returns prior to year end. Reflecting improved expectations for global growth, Australian and global fixed income lost ground giving up some of their gains from earlier in 2019 as did more interest rate sensitive sectors such as property trusts.

While growth slowed through most of 2019, signs started to emerge towards year end that the sharp slowing in global manufacturing and trade was stabilising. The slight improvement in the outlook was primarily driven by Europe and Asia, with US manufacturing still struggling to base. In part this could reflect the continued woes at Boeing and possibly the headwinds from the trade war on the US manufacturing sector. That said, Chinese growth lead indicators have based and are now showing slight improvement.

Employment across most regions remained solid and unemployment rates remained low and around pre-GFC levels. While many commentators remained concerned that low rates may mean that monetary policy may be less effective, US rate cuts flowed through rapidly to a strong lift in US housing indicators.

Geopolitical tensions eased in the fourth quarter

In December, another agreement was made as part of the US-China Phase One trade deal. The US cut tariffs on US$120bn of Chinese goods from 15% to 7.5% but will retain a 25% tariff on US$250bn of Chinese imports. The scheduled increase in US tariffs on China on 15 December and the proposed US tariffs on European auto exports didn’t go ahead, also providing support for share markets. Overall markets view the deal as an election year truce rather than precursor for a sustained truce.

The 2019 slowdown saw central banks swiftly move to support growth and lift inflation. Policy actions have likely limited the fallout from the trade dispute and sharply reduced expectations of a global recession. In response to slowing economic momentum, the US Federal Reserve again cut interest rates by 0.25% in October with recession fears, as gauged by a slight steepening of the US yield curve.

In December, central banks around the world, including the RBA, left interest rates unchanged. The US now seems set for a lengthy pause as housing has improved. The new European Central Bank President, Christine Lagarde, is cautiously positive about economic conditions improving. The Bank of England is waiting to see how the economy will progress now that the UK election has occurred and what fiscal support it will provide in 2020. Overall, central banks stand ready to support growth if activity were to roll over again.

While most developed markets have seen prospects start to improve, Australian growth continues to struggle to recover. Australian GDP grew just 0.4% q/q* and 1.7% y/y^ in the 2019 September quarter, with consumption and investment both weak with growth supported by public spending. The slump in private sector spending is likely to keep the RBA in an easing mode at least through the first half of 2020.

In the UK, Prime Minister Boris Johnson’s Conservative Party had its largest win in over 30 years at the general election on 12 December. The focus now turns to Brexit with the UK on track to leave the European Union at the end of January 2020.

US President Trump was officially impeached by the House in December, but his removal from office unlikely as the Republican-controlled Senate is widely expected not to support the motion when it votes in January 2020.

* q/q = quarter on quarter           
^ y/y = year on year 

How is your super offer tracking?

  1. Check your super balance by logging onto ANZ Internet Banking > click on super
  2. Learn more about taking care of your super and future
  3. Check out how three people, across the generations, went through a super makeover.

 

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“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 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.