ESSSuper update on the Russian-Ukrainian Conflict

Daniel Selioutine - 10 Mar 2022

We are deeply saddened by the Russian-Ukrainian conflict and our thoughts go out to the people affected. The Accumulation and Income Stream portfolios have less than 0.02% invested in Russia.

The start of 2022 saw heightened market volatility as inflation concerns and fears of rising interest rates weighed on investor risk sentiment. Russia’s invasion of Ukraine in February 2022 added to investor uncertainty and contributed to weaker equity market returns.

While geopolitical conflicts have historically had a relatively muted impact on economic growth over the longer term, the Russian-Ukrainian conflict is complicated by sanctions and the consequences of those sanctions on energy markets. Russia accounts for approximately 12% of crude oil production and 17% of natural gas production globally. Higher energy prices have the potential to slow economy growth, reducing the need for central banks to slow an overheating economy.

Australian equities (ASX 300 Index) returned -4.5% and global equities (MSCI World Index) returned -7.5% during the calendar year to 28 February 2022. For context, equity market corrections of approximately -10% are relatively common and healthy for financial markets. Growth sectors such as Communication Services and Information Technology experienced weaker performance, while Energy sector stocks performed strongly due to surging energy prices.

The ESSSuper Investment Team is monitoring the situation closely to ensure the Fund’s investments continue to deliver their investment objectives. Investment returns cannot be guaranteed as investment markets can be volatile. As a consequence, returns can be positive or negative. Past investment performance is not a reliable indicator of future performance.

Emergency Services Superannuation Board (ABN 28 161 296 741) (ESSB), the Trustee of the Emergency Services Superannuation Scheme (ABN 85 894 637 037) (ESSSuper).

This investment commentary does not constitute advice. Investment returns cannot be guaranteed as investment markets can be volatile. As a consequence, returns can be positive or negative. Past investment performance is not a reliable indicator of future performance.

Benefits in ESSSuper's Accumulation Plan, Income Streams and Beneficiary Account products are not guaranteed or underwritten by the Victorian Government or ESSSuper, and ESSSuper does not come under the jurisdiction of the Australian Financial Complaints Authority (AFCA).

The information contained in this update is of a general nature only. It should not be considered as a substitute for reading the relevant ESSSuper Product Disclosure Statement (PDS) that contains detailed information about ESSSuper products, services and features. Before making a decision about an ESSSuper product, you should consider the appropriateness of the product to your personal objectives, financial situation and needs. It may also be beneficial to seek professional advice from a licensed financial planner or adviser. An ESSSuper PDS is available at esssuper.com.au/pds or by calling 1300 650 161.