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ANZ Smart Choice Super report: December 2021

Published 25th March 2022

Returns remain strong despite market challenges

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

ANZ Smart Choice Super Lifestage investment options’ 1 year performance (%)

 

Investment Option

3 months

1 year

3 years (p.a.)

5 years (p.a.)

1940s

2.11

7.68

6.40

5.17

1950s

2.51

9.25

7.54

5.96

1960s

3.13

13.04

10.15

7.69

1970s

3.60

15.53

11.84

8.88

1980s

3.81

16.70

12.60

9.42

1990s

3.79

16.71

12.71

9.52

2000s*

3.73

16.59

12.49

 


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 and superannuation tax. Reporting data is to 31 December 2021 (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.

 

Based on your decade of birth, the table above shows how your investment option has performed in the December 2021 quarter (the ‘3 months’ figure), and over the past one, three and five years.

All of ANZ Smart Choice Super’s Lifestage investment options also saw positive returns for the year ending 31 December 2021. While the spread of the highly contagious Omicron COVID strain has again disrupted communities, health systems and economies, strong vaccination progress has helped to support re-opening and seen the global economy continue to recover, supporting earnings and boosting share market returns. In line with this, the Lifestage funds delivered strong performance for the calendar year returning between 7% to over 16%. Over the quarter (the 3 months ending 31 December 2021) returns were also positive across the range, from 2.1% (for the most defensive 1940s investment option) to over 3.5% for the younger cohorts (1970s, 1980s, 1990s and 2000s funds that have a higher allocation to shares).

The SuperRatings survey groups funds together with similar allocations to growth and defensive assets. All lifestage funds enjoyed a strong end to the calendar year, with most options performing in the top quartile and all options above the median against all survey participants for both the month and the quarter ending 31 December. ANZ Smart Choice Portfolio Manager, Manish Utreja, said “We remain focussed on helping our clients to achieve financial wellbeing by delivering strong and consistent returns that will keep them on the path to a comfortable retirement.”

Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

1940s

2.11

7.68

 6.40

5.17


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 2021 (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

2.51

9.25

 7.54

5.96


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 2021 (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

3.13

13.04

10.15

7.69


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 2021 (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

3.60

15.53

11.84

8.88


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 31 December 2021 (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

3.81

16.70

12.60

9.42


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 2021 (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

 3.79

16.71

12.71

9.52


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 2021 (p.a. = per annum). Past performance is not a reliable indicator of future performance.  

Investment Option

3 months

1 year

3 years (p.a)

Return since inception (18 February 2017)

2000s*

 3.73

16.59

12.49

9.27


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 2021 (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.

A smarter portfolio mix

The cornerstone of ANZ Smart Choice Super’s Lifestage investment philosophy is effective diversification. Members using the lifestage options have a portfolio built across a range of assets, including growth assets such as Australian and international shares, property and also the alternative investment assets that we have added more recently. Lifestage options also include defensive assets such as fixed interest and cash. The lifestage model automatically strikes an appropriate balance between growing and protecting your super savings based on how close you are to retirement.

Different returns across Lifestages explained

Younger members (1990s and 2000s for example) are more heavily invested in growth assets as they have a longer timeframe until retirement and can ‘sit tight’ through any bumpy ride in markets. These members have seen larger increases in their super balances as growth assets continued to perform through to the end of 2021, despite the surge in Omicron cases and resulting lockdowns and disruption.

Older members (those in the 1940s, 1950s and 1960s lifestage options) have also seen solid returns in 2021. These members have more defensive assets in their portfolio, such as cash and bonds, so that savings are better shielded from market volatility entering and during retirement. While returns aren’t as large as those for younger members, these older cohorts have seen their savings better protected from the disruption of the COVID-19 pandemic over the past two years.

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^

-1.38

-3.30

1.91

 

Australian shares

2.13

16.47

13.02

9.53

Global fixed interest

-0.02

-2.61

2.51

2.24

Global property

10.05

26.96

10.06

6.31

Global smaller companies

1.14

20.65

15.87

10.84

International shares (hedged)

6.93

21.03

17.65

12.23

International shares (unhedged)

6.44

26.46

18.41

13.49

Cash

0.10

0.38

0.66

0.95

Conservative

1.35

5.21

5.07

4.22

Moderate

2.00

8.13

7.22

5.82

Growth

2.69

11.85

9.84

7.61



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 2021 (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.

Over the year ending 31 December 2021, returns outside of the fixed interest and cash options were once again very strong in the ‘choose your own’ single asset class range, delivering between 16% and 26%.

Over the quarter, returns were more positive for shares with Australian and International shares returning 2.13% and 6.93% (hedged) respectively and Global property returned 10.05%. Fixed interest (bond) options moderated again with the Australian fixed interest option delivering -1.38% and the Global fixed interest option returning -0.02%.

The lower returns in fixed interest options and cash option reflect the fact that investors have been encouraged to buy riskier assets such as shares on the back of the more positive investment outlook, rather than fixed interest (bonds), where the prospect of rising interest rates have unsettled fixed interest markets.

It was a similar story in our mix of diversified options with the conservative and moderate options delivering somewhat lower returns than the growth options over the quarter as they have a larger portion allocated to fixed interest and cash. The moderate investment option returned 2.00% and growth option 2.69% for the quarter and 8.13% and 11.85% over the calendar year.

You can access your ANZ Smart Choice Super returns across the full suite of investment choices online or by visiting the ‘Investment portfolio’ page via your ANZ Smart Choice Super account.

Market and economic snapshot

Recovery continues despite Omicron

Despite the persistence of COVID, major share markets delivered strong returns through to the end of 2021. The global economy clearly continues to recover, but the pace is easing. While the outlook remains positive, challenges remain, particularly the emergence of new COVID variants and the sharp rise in inflation.

Assessing the key challenges

COVID variants

We ended 2021 looking at high vaccination rates and the re-opening of economies in full swing. Many of us felt we would be ‘living with the virus’ by now. However, Omicron has given us some food for thought, demonstrating that living with the virus may mean future bouts of lockdowns with the emergence of new variants.

Clearly we still have a way to go, and we shouldn’t downplay the impacts of Omicron, but our understanding of COVID and how to manage it improves each day and we should expect COVID to, eventually, become endemic, rather than the threat it currently poses. Meanwhile, Omicron has proven to be disruptive to supply chains as we’ve seen in empty supermarket shelves and the help wanted signs in store windows.

While society continues to adjust to Omicron, markets are now looking forward to a world which has learnt to ‘live with’ COVID, with growth assets continuing benefitting from this, despite the more recent volatility.

The holiday from inflation is over

A further challenge in our future post pandemic world, is the re-emergence of inflation, a risk that hasn’t grabbed headlines for many years, but it looks like the long holiday may be over. The combination of burst of pent-up demand and spending as many countries have come out of lockdowns, and disruptions to supply chains for everything from microchips to cars has meant many goods are harder to find, sending prices spiralling higher.

Both the US economy and inflation have been building up a head of steam with recent data likely ending arguments against the case for higher interest rates. The US economy grew by 5.7% in 2021, the fastest pace since 1984. This has been a strong comeback for the American economic engine despite the pandemic.

A lot of good news was packed into the 5.7% figure with unemployment falling to pre-pandemic levels, rising wages, businesses investing strongly and a lift in consumer spending. However, the bad news is that inflation, as measured by the US Consumer Price Index, was even higher, reaching 7% in December, the biggest number in 40 years.

Inflation isn’t a US-only issue though, with inflation in many countries now higher than before the pandemic. Most central banks have inflation targets, usually in the 2-3% range, and it’s going to take some effort to pull back inflationary trends.

We’ve been concerned about inflation for some time and that’s why we’ve been moving away from fixed interest assets and allocating funds in our lifestage portfolios towards ‘alternative assets’ with different return patterns to traditional assets. We also believe our alternative assets will react differently to a rising interest rate cycle when compared to how fixed income and shares will likely respond.

What may be ahead?

The challenges of Omicron and inflation have contributed to the market jitters we have seen in early 2022, but we shouldn’t forget there was an incredible surge in markets following the pandemic-driven recession.

The more recent market correction was focussed across heavily leveraged assets (those businesses which had borrowed on the basis of zero and negative rates, now fearing these ultra low rates are going to be steadily unwound) and should support returns going forward.

We think we’re now returning to more constructive share market valuations, reflecting the progress that’s being made in removing central bank ‘emergency’ pandemic policy settings. It should always have been expected that the extreme policy support would eventually be removed.

So while the high ‘pandemic bounce back’, double-digit returns aren’t likely to continue, we expect we will likely see solid but more modest returns as the next phase of the recovery matures. All up, it’s still a positive market outlook story in the medium term.

Make superannuation simple and straightforward

Smart Choice Super performance

Article

ANZ Smart Choice Super report: September 2021

All of ANZ Smart Choice Super’s Lifestage investment options saw strong positive returns during the September 2021 quarter.

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ANZ Smart Choice Super report: June 2021

Over the year to June, we can see just how much the pandemic recovery has played out in investment markets.   

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ANZ Smart Choice Super report: March 2021

We can see just how much the pandemic recovery has played out in investment markets with the Lifestage funds returning very strong performances.    

“ANZ Smart Choice Super” is a suite of products consisting of ANZ Smart Choice Super and Pension (PDF 416kB)ANZ Smart Choice Super for employers and their employees (PDF 525kb) and ANZ Smart Choice Super for QBE Management Services Pty Ltd and their employees (PDF 441kb). The ANZ Smart Choice Super and Pension product is distributed by Australia and New Zealand Banking Group Limited (ANZ) (ABN 11 005 357 522).  We recommend that you read the ANZ Financial Services Guide (PDF 479kB), before deciding whether to acquire or continue to hold this product. View the ANZ Smart Choice Super and Pension Target Market Determination (PDF 252kB). 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. View the ANZ Smart Choice Super for employer and their employees Target Market Determination (PDF 464 kB). 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 Insignia Financial Group of companies, comprising Insignia Financial Ltd (formerly IOOF Holdings Ltd) ABN 49 100 103 722 and its related bodies corporate (Insignia Financial Group). 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 Insignia Financial Group of companies (including OPC) are not related bodies corporate. ANZ does not stand behind or 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.

This article was prepared and written by OPC.

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

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Fee Analysis: Research conducted by SuperRatings Pty Ltd, holder of Australian Financial Services Licence No. 311880 at the request of OPC. For a copy of the latest SuperRatings research, click here (PDF 146kB) or call 13 12 87.

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