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CareSuper closes 2016/17 year with strong returns

27 July 2017

In a year of rising financial markets, CareSuper’s Managed and Asset Class options delivered positive results for members.

Among CareSuper’s Managed options, our Growth, Balanced and Alternative Growth options delivered the strongest returns, while our Overseas Shares and Australian Shares were our highest-performing Asset Class options.

Superannuation Balanced option delivers 11.70%

The Balanced option (where most members have some of their super money invested) delivered a double-digit return of 11.70% for the 2016/17 financial year. This ranks in the top 25% of similar funds, a ranking CareSuper has consistently achieved for over 10 years.*

Competitive returns for Pension members

CareSuper’s Pension options also delivered competitive returns for the 2016/17 financial year. A majority of Pension members have their money invested in our Balanced, Conservative Balanced and Capital Stable options. These options have consistently produced top quartile performance over time, meaning they are ranked in the top 25% of similar funds, as surveyed by SuperRatings.** In fact, the Balanced option is the number 1 ranked** pension option over 10 years.

Which assets drove these returns?

The strongest performing asset classes throughout 2016/17 were overseas shares, Australian shares, property and infrastructure (infrastructure is part of the Alternatives asset class). Each of these asset classes ended the financial year with double-digit returns.

These asset classes form part of the mix of investments which make up CareSuper’s Managed options. Each Managed option holds a different combination of diverse asset classes, which all contributed strongly to CareSuper’s overall performance.

The fact that returns came from a variety of sources highlights the importance of diversifying investments across asset classes. This helps us make the most of different investment opportunities over time, which can help us produce more stable returns.

How did low interest rates affect investment returns?

Members invested in lower risk options (especially those which invest heavily in cash and fixed interest investments) would have felt the impact of record low interest rates over the 2016/17 financial year.

Despite this, the returns of CareSuper’s lower-risk options compare favourably, considering the Australian cash rate was 1.5% through 2016/17, and the Australian fixed interest market (or bond market) returned much less, at only 0.25%.This is reflected in the returns of the Capital Guaranteed, Capital Secure and Fixed Interest options, which invest mainly in these assets.

Our active approach to investing continues to benefit members

During 2016/17, the Australian share market returned 13.8%.^

In comparison, CareSuper’s (superannuation) Australian Shares option delivered a return of 14.72%, which outperformed the relevant Index by 1%.^ That extra 1% was achieved thanks to our active investment approach, which involves our investment managers making active decisions about stock selection to outperform the market.

Similarly, the return from overseas shares (as measured by the MSCI World Index in Australian dollars) was 14.7%. CareSuper’s (superannuation) Overseas Shares option returned 18.56% for 2016/17 – outperforming the index by an impressive 3%.#

While passively-managed investments, which by definition, aim to match the return of the market, less fees, provided the bulk of the return we’re confident that our active approach has helped us produce ‘a bit extra’ for our members over the years, which can make a significant difference to account balances over the long term. This approach has been an important contributor to the results we’ve generated in the past, and will be essential in helping us deliver competitive returns in the future.

Investing for the future

Over 2016/17, share markets around the world delivered results above longer term averages. Rising share prices are one of the many factors we’re keeping in mind as we move into 2017/18. Despite the current positive indicators, like low unemployment, low inflation and strong investor confidence, other factors, such as high levels of government and household debt, combined with political tensions in Europe, the Middle East and Asia, suggest that a cautious approach – such as CareSuper’s investment philosophy –  could be a prudent one.

Investing is always subject to uncertainty and risk, even when markets are strong, so it’s important to have realistic expectations about the level of future returns.

As always, members should focus on the long-term return objectives of the options in which they’re invested, and compare long-term results to those objectives.

Regardless of future market conditions, we’re confident that CareSuper is well-positioned to respond to a changing environment and make the most of new opportunities that arise.

While next year’s returns may be more subdued than the results we saw in 2016/17, our members can depend on CareSuper to stick to its well-established approach to investing and continue to produce stable returns for the future.

Learn more

Past performance is not a reliable indicator of future performance and you should consider other factors before choosing a fund or changing your investments.

*Source: SuperRatings Fund Crediting Rate Survey – SR50 Balanced (60-76) Index, June 2017.

**Source: SuperRatings Pension Fund Crediting Rate Survey – SRP50 Balanced (60-76) Index, June 2017.

Source: Bloomberg AusBond Composite 0+ Years Index.

^ This is based on the performance of the S&P/ASX 300 Accumulation Index over the period, which measures the overall performance, derived from share price movement and dividends of the 300 largest companies listed on the ASX, by market capitalisation.

# Several factors contributed to this outperformance including investment manager performance; the individual shares that comprise CareSuper’s overseas shares portfolio, and partial currency hedging.

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