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ANZ Smart Choice Super report: September 2018


Published 14 November 2018

Returns have been boosted by positive sharemarkets in the past 12 months, explains Mark Rider.

In brief

  • From October 2017 to September 2018, lifestage investment options had strong returns.
  • US economic strength continues to drive global growth and sharemarket performance.
  • Super is a long-term investment, so take this into account when viewing your returns.

I’m in a lifestage option – how did my investment option fare?

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

Options

3 months

1 year

3 year (p.a)

3 years (p.a)

1940s

1.46

6.16

4.49

4.61

1950s

1.61

6.78

5.84

6.03

1960s

2.15

8.74

7.69

7.35

1970s

2.54

10.43

9.17

8.31

1980s

2.76

11.23

9.82

8.83

1990s

2.84

11.47

10.02

8.94

2000s

2.72

10.95


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 September 30, 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 over three and five years yet.

Investment returns for lifestage options – which most ANZ Smart Choice Super members are invested in – tracked strongly across the 12 months to September 30, 2018 with four of the funds delivering returns greater than 10 per cent.

Our lifestage members are in investment options based on their decade of birth, as you can see in the table above. In these investment options, younger members’ savings are mostly allocated to ‘growth assets’ (higher risk investments with higher potential returns), while ‘defensive assets’ (more stable, lower return investments) make up a larger share as members age.

As you can see in the table, returns for the past 12 months ranged from 11.47 per cent for those born in the 1990s, through to 6.16 per cent for the more conservative 1940s investment option.

(Keep in mind that 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.)

In the ‘1 year’ column you can see how much your fund grew in the period from October 1, 2017 to September 30, 2018. The ‘3 months’ column shows returns for the three months to September 30, 2018. In the last column, ‘5 years’ you can see the average annual returns in your lifestage option for the past five years.

Despite noise, Australian and world economy is performing well

One of the main reasons investments have performed well in the past 12 months is because the strong US economy has driven double-digit returns in the US sharemarket. Good corporate earnings there have also been supported by President Donald Trump’s federal tax cuts.

(However, risks to growth from the US trade war with China; and a gradual raising of interest rates in the US have, since the end of September, led to a correction in sharemarkets as investors factored in lower earnings from companies.)

In Europe, while political dramas have overshadowed positive economic news in the past year, sharemarket returns have been positive. The European Central Bank has announced it will keep interest rates on hold until at least the middle of 2019, giving investors some certainty.

While China’s economy is cooling modestly, it is still growing strongly relative to other large economies and recent action by its central bank will help will help manage it as it continues to cool, by cutting the amount of credit available.

In Australia, the resources sector has been supported by strong commodity prices and the weaker Australian dollar.  Sentiment towards banks is being impacted by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, but the economy has performed well, despite the overlay of a challenging political backdrop. House prices and dwelling construction have eased, but this is being offset by some state governments running substantial infrastructure project programs, particularly in New South Wales. The Reserve Bank of Australia is likely to keep interest rates on hold at a low level for some time yet.

Looking ahead, ANZ’s chief investment office expects economic growth to remain on trend with what we’ve seen so far this year until 2019, with perhaps some slowing after that. Sharemarket returns are likely to be weaker in the period ahead.

As always, consider that your super is most likely a long-term investment, so staying the course should help to balance out the highs and lows of the sharemarket as you travel toward your retirement.

Shares

The US is still the locomotive driving global sharemarket performance. Global shares finished the year at 12.9% in hedged terms. 

 

US Shares

Trade tensions have had limited impact on business confidence and the economy remains very strong with the bull run enduring even as the US central bank continues to nudge up rates.

European Shares

Political drama has overshadowed positive economic fundamentals in the year, but returns were still positive. Europe’s central bank is likely to keep interest rates on hold until at least the middle of 2019. 

Emerging Markets

Despite a more testing global backdrop, particularly a stronger US dollar and higher rates, shares in emerging markets still delivered solid returns. 

Australian Shares

The Australian economy performed well. Company profits have been solid at 8.2% in 2018 and similar growth is expected next year. House prices are slowly declining, but government spending on large-scale infrastructure projects, mainly in NSW has helped balance that.

Fixed Interest (Bonds)

Amid increased geopolitical uncertainty the flight to safety kept bond markets in check.

 

International Fixed Interest

Weaker economic activity outside of the US limited the rise in global bond yields.

Australian Fixed Interest

Stronger returns in Australian fixed interest reflected the Reserve Bank of Australia’s guidance of no change to interest rates and weak inflation and wages growth. Declining house prices in Sydney and Melbourne also make it unlikely that rates will tighten this year.

International Property

International property and infrastructure underperformed shares, due to gradually rising US bond yields.

Australian Dollar / US Dollar

The $A/$US remains under pressure due mainly to the US dollar’s strength. Factors putting downward pressure on the exchange rate include the RBA keeping rates on hold and weaker Chinese economic growth. Bulk commodity prices have been strong and are putting upward pressure on the Australian dollar.

 

Source: JP Morgan & ANZ Wealth. Currency - Bloomberg & ANZ Wealth

Yearly returns to September 30, 2018.

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 Index (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) | infrastructure - FTSE Developed Core infrastructure 50/50 Net Hedged to AUD.

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 

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

All the ANZ Smart Choice low-cost options saw positive returns for the 12 months ending September 30, 2018. As shown below, the best-performing investment option was the ‘international equities (unhedged)’ option, which delivered a healthy 18.58 per cent return.

This was followed by the ‘global smaller companies’ option which returned a strong 17.34 per cent for the year to September 30, 2018, and the ‘Australian equities’ option returned 13.09 per cent.

For those in multi-asset options, the annual returns ranged from 4.95 per cent for the conservative option through to 9.12 per cent for the growth option.

ANZ Smart Choice Super choose your won investment mix performance (%)

Investment Option

 

3 months

 

1 year

 

3 years (p.a)

 

5 years (p.a.)

 

Cash

0.34

1.37

1.52

1.80

Conservative

1.14

4.95

3.96

4.10

Moderate

1.72

7.12

6.14

6.19

Growth

2.25

9.12

8.30

7.71

Australian equities

1.57

13.09

11.39

7.98

International equities (hedged)

5.20

11.37

13.05

11.02

Global property

0.82

5.08

6.56

8.21

Global fixed interest

-0.23

0.41

2.25

3.54

Australian fixed interest

0.26

2.48

Global smaller companies

4.03

17.34

11.88

International equities (unhedged)

6.80

18.58

11.08


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 September 30, 2018 p.a. (per annum). The ‘Australian fixed income’ investment options started February 18, 2017 and therefore three and five-year performance data is not yet available. Similarly, ‘international equities (unhedged)’ and the ‘global smaller companies’ started 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. Past performance is not a reliable indicator of future performance.

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, RSE L0000673), and 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 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.