A great year for members’ super balances
It’s been another great year for CareSuper members, with the Balanced option delivering another year of strong returns. It’s the fifth year out of the last six that returns have been in double-digits.
The Balanced option for super members returned 10.10% over the 2017/18 financial year, above the median return of 9.22% for other similar funds over the same period.*
The pension Balanced option also performed well, returning 11.09% for the financial year, compared to the median return of 9.92% for other similar funds over that period.#
All our other investment options delivered positive returns too. Options with more investments in shares and unlisted assets (like infrastructure and direct property) were the best performers.
Our Australian Shares, Direct Property and Overseas Shares options delivered the strongest returns, while Growth, Balanced and Alternative Growth also performed strongly.
How we compare long-term
Our Balanced option for super members ranked as the top performing fund over the last 20 years.* And most of our Managed options are ranked amongst the best performing funds with returns in the top quartile over 5, 7, 10, 15 and 20 years.^ This includes our Balanced, Growth Alternative Growth and Capital Stable options.
And for the majority of our pension members who have their money invested in our Balanced, Conservative Balanced and Capital Stable options, there's more great news. All of these options are ranked in the top quartile over 5, 7 and 10 years, and our Balanced option ranked as the top performing fund over the last 10 years.#
Suzanne Branton, CareSuper’s Chief Investment Officer, says these returns are the result of our long-term focus and active approach to investing. ‘Our members are in it for the long term, and so are we,’ she says. ‘Strong one-year results are a great boost for your super in the short-term but we’re investing with a longer horizon in mind, so those longer-term figures are a true measure of our success’.
The key drivers behind our returns
While we saw some ups and downs over the year, strong share market performance both in Australia and overseas was a key factor in our double-digit performance. But it’s not just about how strongly share markets performed – our active management approach also added significant value for our members.
‘Our active management strategy is paying dividends for members,’ says Branton. ‘For example, the Australian share market returned 13% over the financial year, but our Australian shares portfolio returned 17%. That’s 4% more we earnt for our members by being strategic in our portfolio rather than just following the broader market.’**
While shares were the standout, unlisted assets also did quite well as investors continued to search for yield. In particular, we saw some great returns from our direct property investments and our private equity and infrastructure investments (which form part of our Alternatives asset class).
In contrast, bond (fixed interest) and cash returns were relatively modest, and members invested in options with a high allocation to these asset classes (in particular the Capital Guaranteed, Capital Secure and Fixed Interest options) received more subdued returns.
What we can expect for this financial year
Over the next 12 months, we expect to see economic growth continue both in Australia and around the world, which suggests share markets should continue to have reasonable performance. But there are also signs of some risk. Rising interest rates in the US could mean more volatility in markets.
In Australia, while growth is likely to be helped by strong business investment and infrastructure, trade fears, low wage growth and the softening housing market could lead to further uncertainty.
So what does this mean for your super?
‘After nine years in a row of positive returns in the Balanced option, we’re conscious that we might be approaching the end of a market cycle and that returns are likely to be somewhat lower than members have experienced over the last few years’. And that’s okay, according to Branton.
‘Our Balanced option is well-diversified across different asset classes and is designed to weather such market cycles. We aren’t reliant just on shares or reacting to the short-term. Our approach to investing is to produce strong, consistent returns over long periods.
'We’ll continue to actively seek out the best investment opportunities in Australia and overseas that we believe will deliver strong risk-adjusted returns for members. That’s what’s important for results going forward.’
Past performance is not a reliable indicator of future performance and you should consider other factors before choosing a fund or changing your investments.
* SuperRatings Fund Crediting Rate Survey - SR50 Balanced (60-76) Index, June 2018.
#SuperRatings Pension Fund Crediting Rate Survey - SRP50 Balanced (60-76) Index, June 2018.
^SuperRatings Fund Crediting Rate Survey, June 2018. Various indices.
** The figures quoted are gross of fees and taxes.