Investment markets update - November 2011

Whilst it is hard to ignore the ongoing volatility in global and local share markets it is important to remember super is a long-term investment and extended periods of volatility (the ups and downs) can be expected to occur from time to time.  History shows that it generally pays to stay focused on your long-term goals, even in retirement.

The positive returns in October and November have to a large extent offset the poor returns experienced in the September quarter (with the exception of the Shares Only investment option).

It is important for you to know that ESSSuper is thinking about investment risks and proactively managing your super investments. Importantly, the Fund has a strategy to diversify our portfolios by investing in other growth assets (not just shares). This can have the benefit of reducing volatility of the portfolios when share markets are rising or falling rapidly.

What is happening in invesment markets?

As raised in previous Investment updates, concerns over the European banking system and Sovereign risk in peripheral Europe (i.e. Portugal, Ireland, Italy, Greece & Spain) have been the main drivers of uncertainty, and subsequently, market volatility. Until there is full clarity around austerity measures to reduce government spending and European Central Bank rescue packages, the volatility is likely to continue with markets driven by sentiment and day to day news flow.

In the US, economic data remains mixed, and despite strong corporate balance sheets and company earning data, both consumers and markets remain nervous.

In Australia there is continued demand for our exports and our relatively high interest rates means that the Reserve Bank has ability to further lower interest rates should there be a requirement to stimulate the economy.

Media reports about super returns

You may have read in the news that Australian superannuation funds have reported the worst five-year returns since the introduction of compulsory super contributions in 1992.
 
Although the median "balanced" super fund (as measured by SuperRatings) averaged just 0.92 percent a year for each of the past five years, ESSSuper has achieved a far superior result for our members.
 
As at 30 September, our Balanced Option achieved 3.02% - that is an extra 2.1% per annum for each of the 5 years (or 11.35% in cumulative terms).

Here to Help

If you have any questions about your super, our Member Contact Centre is open Monday to Friday, 8.30am to 5.00pm, and we encourage you to call and ask to speak with one of our Consultants:

• 1300 650 161 (for emergency services members), or
• 1300 655 476 (for state super members).

15 November 2011