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ESSSuper’s investment option performance
Positive returns across all asset classes and markets contributed to the positive performance of all ESSSuper Accumulation Plan, Income Streams and Beneficiary Account growth based investment options (Growth, High Growth, Balanced and Shares only) over the quarter. The more defensively positioned Conservative Option also delivered a positive return, whilst the Cash and Defensive options performed in line with expectations.
Our relative performance against peers for the short term and longer term remains strong (in terms of SuperRatings surveys). The table below illustrates the performance against our peers for the Accumulation Plan’s investment options for the 1, 5 & 10 years to 31 March 2012.
As illustrated, we achieved top quartile for five of the six options for the 12 month period (including top ranking for two of the options) and above median for all products over 5 and 10 years.
ESSSuper's Accumulation Plan comparative investment performance (31 March 2012)
| Investment Option
|| 1 Year
|| 5 Year
|| 3 of 66
|| 23 of 58
|| 8 of 26
|| 1 of 66
|| 2 of 92
|| 2 of 77
|| 4 of 41
|| 1 of 124
|| 3 of 104
|| 13 of 113
|| 23 of 96
|| 50 of 78
|1st Quartile (top 25% of funds)
|| 2nd Quartile (2nd 25% of funds)
|| 3rd Quartile (3rd 25% of funds)
Note: Past performance is not a reliable indicator of future performance.
The above results are for our Accumulation Plan account, however they are indicative of ESSSuper’s Beneficiary Account and Income Streams.
The March quarter was very positive for investors, with all asset classes generating positive returns.
Globally the economic situation shows signs of stabilising, assisted by the concerted efforts of stimulatory packages and debt refinancing in Europe, and historically low interest rates in the US and UK. Generally this is a global phenomenon; corporate earnings are on the up and businesses remain strong.
European parliaments have agreed to a refinancing package: reducing the risks of a collapse in their banking system. Despite this renewed optimism, risks still remain with the UK and Southern European economies remaining close to (if not technically in) recession. The US Federal Reserve has announced that the current economic incentives are unlikely to continue, however the US is showing encouraging signs of a recovery with emerging job creation. The Chinese economy is showing signs of slowing from the growth levels experienced over the last decade and oil prices remain stubbornly high, with fears of further conflict in the Middle East and improving US economic growth.
Equity markets were extremely positive reflecting the renewed optimism with the Australian Index (S&P200 Accumulation Index) up by 8.4%, the US index (as measured by the S&P500) up by 12%, the UK by 3.5%, and Japan up 19.3%. The Australian Dollar strengthened slightly against the US and Yen but weakened against the Euro. Reflecting this, global markets (as measured by MSCI index) returned 11.3% on a fully hedged basis and 10.5% on an unhedged basis.
The Reserve Bank of Australia kept interest rates on hold for the quarter at 4.25%, much to the disappointment of retailers who appear to be struggling. The continued attractiveness of the current relatively higher interest rates and safety of Australian bonds from offshore and local investors continue to place downward pressure on interest rates.
Looking ahead, stock markets appear to offer pockets of value and corporate balance sheets remain healthy, however domestically risks still remain. Retailers and exporters (apart from raw materials) are suffering, the high Australian Dollar is causing issues and non mining states struggle with below trend economic growth and the many issues surrounding job losses. Both Europe and the US are currently in the midst of election cycles and the political implications are continually reported, especially in Europe.
Our investment options are developed with members capital protection in mind, and we are pleased to report that in the strong quarter our equity managers kept pace with markets. Our exposures to specialist credit, investment grade credit, infrastructure and property have all generated positive returns for our members.
We have appointed a specialist credit manager to capitalise on market opportunities as a new alternative approach, which is expected to take advantage of the current and expected structural imbalances occurring in offshore markets.
We continue to review our currency exposure, and as previously advised to members, have been managing the Fund’s exposure in a proficient manner. As at the end of quarter, we continued to hold the 30% hedge position (against the US dollar and the Pound versus our neutral hedging position of 50%). We are closely monitoring our currency position in these volatile markets, and have in place a structured approach to managing our exposures.
Our Listed Equity portfolios continue to support managers that favour strong capital preservation, reflecting our philosophy and helping returns to the Fund and our members.
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