Up to date as of April 2024
Longer-term returns remain strong, with the Balanced option posting returns of 8.1% p.a. over the last 5 years, and 8.3% p.a. over the 10 years to the end of March 2024. Other investment option returns can be found here. The table below shows returns from the major publicly traded asset classes for periods to the end of March 2024.
| Returns to end March 2024 (pre-super tax) |
3 months % |
1 year % |
3 year % p.a. |
5 year % p.a. |
10 year % p.a. |
|---|---|---|---|---|---|
| Cash (Bloomberg AusBond Bank Bill) | 1.1 | 4.2 | 2.1 | 1.5 | 1.6 |
| Australian Diversified Fixed Interest (Bloomberg AusBond Composite Bond) | 1.0 | 1.5 | -1.3 | 0.2 | 1.6 |
| Global diversified fixed income (Bloomberg Barclays Global-Aggregate hedged to $A) | -0.3 | 2.5 | -2.4 | -0.1 | 1.0 |
| Australian listed property (S&P/ASX 300 A-REIT Accumulation) | 16.2 | 35.4 | 11.5 | 6.7 | 8.3 |
| Global listed property (FTSE EPRA/NAREIT Developed, hedged to $A) | -0.1 | 7.7 | -0.7 | -0.8 | 1.7 |
| Australian shares (S&P/ASX 300 Accumulation) | 5.4 | 14.4 | 9.4 | 9.2 | 8.6 |
| Developed market shares, in $A unhedged (MSCI World ex-Australia) | 14.1 | 28.7 | 14.4 | 14.1 | 13.7 |
| Developed market shares, hedged to $A (MSCI World ex-Australia) | 10.1 | 25.0 | 8.6 | 11.1 | 10.4 |
| Emerging market shares, in $A unhedged (MSCI EM) | 7.1 | 11.0 | 0.0 | 4.0 | 6.1 |
Sources: Bloomberg, Australian Retirement Trust. Past performance is not a reliable indication of future performance.
World share markets performed strongly over the first quarter of 2024, supported by increased confidence in prospects for the global economy.
Japanese equities continued their strong performance from 2023, outperforming shares in the US and Europe over the quarter. All major industry sectors produced strong returns with technology shares again the best performers.
A fall in the Australian dollar against a range of developed and emerging market currencies added to the returns of unhedged international shares over the quarter, and over the year to March 2024.
Australian shares underperformed the major developed markets while nevertheless producing strong returns, with the major indices rising to all-time highs late in the quarter. While IT shares were the best performing over the quarter, financials and consumer discretionary shares made the largest contributions to returns.
Australian fixed income returns were positive over the quarter despite a small rise in government bond yields: a positive return from non-government securities offset modest losses on government bonds. However, global fixed income returns were negative as yields rose substantially in the world’s major bond markets. Although inflation rates have generally declined, service price inflation remains elevated in most major economies. Most of the world’s major central banks – and the Reserve Bank of Australia (RBA) – kept interest rates unchanged over the quarter, while signalling that official interest rates were unlikely to be reduced as quickly as markets had been expecting. In contrast, the Bank of Japan began its long-awaited normalisation of monetary policy, raising its official interest rate to 0, after reducing it to -0.1% in 2016.
The rise in global bond yields impacted the returns from global listed real estate securities (REITs), as higher bond yields reduce the attractiveness of REITs. However, Australian REITs performed very strongly, largely reflecting a strong performance from the Goodman Group.
The challenge facing the world’s central banks remains an extraordinarily difficult one: bring inflation back under control within a reasonable timeframe without causing a major economic downturn in the process. In addition, the geopolitical environment remains a fraught one.
However, labour markets generally remain very tight, and there remains a risk that faster growth in wages and labour costs will result in inflation remaining at unacceptable levels, particularly in the service industries. While this is unlikely to see official interest rates increased further – at least outside of Japan – it is likely to delay and limit any future interest rate cuts.
Tighter monetary policy settings across much of the world have slowed economic growth considerably, but the risk of a major economic downturn appears to have eased. Economic conditions in the US remain particularly solid, although elsewhere, the major economies are either in a mild recession (UK) or teetering on the brink of one (Eurozone and Japan). Here in Australia, overall economic growth has slowed to a crawl as strong growth in business investment and public spending has been mostly offset by weaker consumer spending. While the highest population growth in decades has propped up overall spending volumes, they are nevertheless declining in per capita terms.
We do not design portfolios based on our own or anyone else’s short-term economic, market or geopolitical forecasts. And we have no way of knowing with any certainty how far or how quickly inflation will fall from here or when interest rates will peak. However, our investment team and our external investment managers do seek to capitalise on opportunities that inevitably emerge during times of heightened market volatility.
ART continues to hold a substantial allocation to alternative assets, particularly the key unlisted asset classes – real estate, infrastructure, private equity and private debt. As a large superannuation fund, we have well-diversified portfolios of these assets that we expect will deliver strong, long-term returns, while reducing our members’ exposure to share market volatility.
During the quarter, our infrastructure team made an additional investment in Puget Sound Energy, an energy utility in Washington State to enable an additional investment in renewable energy capacity. The team also added to ART’s investment in FiberLight, a US fibre network infrastructure provider.
Our private equity team committed to investments in EngageSmart, a US based provider of customer engagement software to healthcare practices and integrated payment solutions to governments, utilities and financial services companies; and to BigTop, a US based designer and manufacturer of fabric structures for commercial, industrial, military and recreational uses.
In our private debt portfolios, we extended credit to Crown Labs, a US manufacturer and distributor of topical skin care products.
We have continued to adjust our Dynamic Asset Allocation (DAA) strategy in response to changes in relative value between asset classes over the March quarter and will continue to do so as opportunities present themselves. During the quarter we reduced our exposure to equities as share prices continued to rise and increased our holdings of sovereign bonds, as government bond yields moved higher.
At the end of March 2024, our DAA strategy slightly favoured shares and bonds over cash. Within DAA’s shares allocation, we preferred Japanese, UK and European shares over shares in the US and Australia. In fixed income, we increased our overweight positions in the UK and US while remaining underweight in European and Japanese bonds. The DAA strategy’s currency exposure favours the Scandinavian currencies, the Malaysian ringgit and the Japanese yen over the Canadian and New Zealand dollars, the Czech koruna and the euro.
There are a number of ART investment options that give exposure to a diversified range of asset classes, including both public market and unlisted investments. In fact, ART offers members a range of investment options to allow you to tailor your investments to your needs. We’re making changes to the investment options we offer members from 1 July 2024. The Product Update has the details.
If you want more information or advice to decide which investment option or group of options best meets your needs, our financial advisers are here to help. Please give ART a call on 13 11 84.
Past performance is not a reliable indication of future performance. Australian Retirement Trust employees provide advice as representatives of Sunsuper Financial Services Pty Ltd (ABN 50 087 154 818 AFSL No. 227867) (SFS), which is wholly owned by the Trustee as an asset of Australian Retirement Trust Superannuation Fund (ABN 60 905 115 063). (SFS) is a separate legal entity responsible for the financial services it provides. Refer to the Financial Services Guide for more information.
The Australian Retirement Trust Super Savings Balanced option adopted the pre-merger investment strategy of the Sunsuper Balanced option from 28 February 2022. The Super Savings Balanced option has identical investments to the Balanced Pool in the Super Savings Lifecycle Investment Strategy.
