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ANZ Smart Choice Super report: March 2020


Published 21 May 2020

A challenging start to 2020

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


Investment Option

3 months

1 year

3 years (p.a.)

5 years (p.a.)

1940s

-6.05

-1.06

3.10

2.75

1950s

-7.61

-2.01

3.05

3.02

1960s

-11.83

-4.98

2.69

3.05

1970s

-14.25

-6.61

2.67

3.27

1980s

-15.49

-7.46

2.62

3.35

1990s

-15.62

-7.54

2.66

3.40

2000s

-15.33

-7.49

2.49


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. Reporting data is to 31 March 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.)

 

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

ANZ Smart Choice Super’s Lifestage investment options strong performance over 2019 was challenged during the March 2020 quarter as markets fluctuated wildly due to the uncertainty about the economic impacts of COVID-19 (coronavirus).

Over the year to March, returns ranged from -1% to -5% for the more defensive funds to -7.5% for the more growth orientated funds. Returns in 2019 had been driven by strong performance from Australian and global shares in particular, but March 2020 saw a significant correction across asset classes. Please read below for a market and economic snapshot for the March quarter.

According to estimates from SuperRatings, 2019 was the best year for Australian super funds in six years so the subsequent downturn in the March quarter must be considered in that context. It’s also worth noting that we have seen markets recover somewhat in April.

The SuperRatings survey groups funds together with similar allocations to growth assets. Within these sections of the survey, all returns have been lower over the year to March, but our more defensive Lifestage investment options have performed better than the median manager.

ANZ Smart Choice Portfolio Manager, Manish Utreja, said: “The share market was unusually strong in 2019, but COVID-19 has caused considerable disruption to communities, economies and markets in 2020. Whilst the pandemic is alarming, it’s important to remember that super is generally a long-term investment and we maintain our diversified investment strategy to see us through the current market volatility.”

 


Investment Option

3 months

1 year

3 years (p.a)

5 years (p.a.)

1940s

-6.05

-1.06

3.10

2.75


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 March 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

-7.61

-2.01

3.05

3.02


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 March 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

-11.83

-4.98

2.69

3.05


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 March 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

-14.25

-6.61

2.67

3.27


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 March 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

-15.49

-7.46

2.62

3.35


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 March 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

-15.62

-7.54

2.66

3.40


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 March 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

-15.33

-7.49

2.49


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. Reporting data is to 31 March 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’, such as shares, so they have been hit hardest by the market downturn that resulted from the lockdown measures put in place to control the COVID-19 pandemic. Growth assets tend to earn the highest returns over time, but when the markets fall, they are worst hit. For younger members, there’s time to recover from periods of volatility and growth assets have been the biggest beneficiaries of the significant market rally we’ve seen over the past decade.

Older members have seen less impact to their super balances as they have less 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^

2.19

5.10

4.26

Australian shares

-21.04

-12.54

0.22

1.99

Global fixed interest

0.28

3.90

3.18

2.84

Global property

-26.26

-21.37

-3.50

-0.74

Global smaller companies†

-17.70

-8.64

3.07

International shares (hedged)

-19.45

-10.42

1.25

3.33

International shares (unhedged)

-8.29

3.95

8.90

Cash

0.18

0.98

1.24

1.44

Conservative

-4.28

-0.08

2.93

2.61

Moderate

-7.89

-2.27

3.07

3.12

Growth

-11.91

-5.03

2.84

3.28


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 March 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’ 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.

Fixed interest was the best performer over the quarter and drove returns of 2.19% for the Australian fixed interest fund and 0.28% for the global fixed interest fund.

Global property, global smaller companies, Australian shares and international shares (hedged), were the worst performers for the quarter, so returns for ANZ Smart Choice members were driven down in these investment options.

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 in ANZ Internet Banking

Market and economic snapshot

2019 was an unusually strong year for returns with risk assets such as shares and defensive assets such as government bonds both delivering returns well above their long-run averages (looking at a 20-year timeframe). Most growth assets were generally priced above their fair value so we ended the year cautious about a possible correction ahead.

Then, on 31 December 2019, China began reporting cases of a new virus, COVID-19 that began in Wuhan, Hubei Province. The developed share markets initially shrugged off these early reports and continued to rally during January 2020 and into the first three weeks of February. This rally reflected the fact that central banks had continued to lower interest rates during 2019 to keep investment and growth high and avoid a sharp slowing in activity. As a result the markets believed the risk of a recession was steadily falling.

As COVID-19 spread globally at an alarming rate into March, particularly in Italy, markets and governments became much more concerned that the virus would spread into a global pandemic. By mid-March this risk had surged.

Why did the markets fall so dramatically 

While the COVID-19 pandemic began as a global health crisis, the lockdown and isolation measures designed to control the spread have impacted a wide range of industries across the globe.

As such a large and wide variety of goods are “Made in China”, city and factory closures in China have hit global supply chains hard, restricting business activity across many sectors.

Travel and tourism industries have also been badly damaged, with airlines grounding flights and people required to cancel business trips and holidays. The reduction in the demand for travel and the lack of factory activity has also impacted demand for oil, causing its price to fall. The oil price had already been affected by a dispute between OPEC, the group of oil producers, and Russia. COVID-19 has driven the price down even further.

Other sectors impacted by isolation and lockdown measures include sport and hospitality, cafes and restaurants, gyms, hotels, cinemas, transportation, entertainment and the arts, retail and construction. All up, the economy has been put into somewhat of a ‘deep freeze’ and this has led to rising unemployment. In the United States, the number of people filing for unemployment hit a record high with 6.6 million people filing jobless claims in the week ending 28 March. This signaled an end to a decade of expansion for one of the world's largest economies.

Reaction by policy makers 

Central banks and governments have moved swiftly and strongly to allay investor fears and increase market confidence by announcing large fiscal and monetary policy support.

Australia’s Prime Minister Scott Morrison announced several stimulus packages in March. These included $17.6bn for welfare and wage subsidies, a $66bn plan with a $550 coronavirus supplement to jobseeker payments and payments to welfare recipients. A third $130bn JobKeeper support package included $1,500 for employers to pass onto employees to keep them in work.

In the US, the Federal Reserve (the Fed) decided to cut their main interest rate to near zero and began buying government bonds to add money directly into the economy in a dramatic shift in policy settings. President Donald Trump also deployed a huge USD$2.2 trillion COVID-19 stimulus package which includes an emergency universal income payment of USD$1,200 for every adult who makes under USD$75,000 a year. Several European countries and the UK have also implemented stimulus packages.

These enormous fiscal and monetary responses and some considerable success in flattening infection curves have resulted in share markets in most major countries clawing back some of the March losses in April.

Where to from here?

It’s understandable that the news headlines can cause a feeling of panic, but it’s important to take a calm and considered approach to your super. A long-term focus is critical during times of market turbulence and history has shown, time and again, that markets have the ability to recover from significant market downturns.

Super is an investment vehicle for your retirement, so it’s generally best to stick to your strategy and still be invested in the market for the anticipated rebound. Speak to an adviser if you still have concerns.

At the time of writing (end of April 2020), many countries are just starting to shift from the lockdown and isolation measures that have flattened infection curves to managing the first steps to re-opening economies. The degree of re-opening varies greatly depending on the level of success achieved in maintaining flat infection curves. Markets will be watching closely to determine which countries are better able to manage this next phase.

 

Need more information?

  1. Check your super balance by logging onto ANZ Internet Banking > click on super
  2. Learn more about gaining access to your super due to COVID-19.
  3. Find out how to ensure hasty decisions don’t erode your super.
  4. Read our COVID-19 FAQs.

 

Make superannuation simple and straightforward

Smart Choice Super performance

Article

ANZ Smart Choice Super report: December 2019
 

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

Article

ANZ Smart Choice Super report: September 2019
 

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

Article

ANZ Smart Choice Super report: June 2019
 

The 2018/19 financial year has been strong for super returns.

Why it’s important to have a beneficiary nomination

Encouraging your employees to nominate a beneficiary will ensure their retirement savings are distributed in accordance with their wishes, should the worst occur.


“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.

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.