Investment Performance Highlights – 26 March 2020
Daniel Selioutine, Head of Investments, takes the opportunity to review market activity and the Fund’s performance in light of recent events.
Market volatility settled slightly over the past week as central banks moved to calm investment markets, with the U.S. Federal Reserve restarting quantitative easing. Quantitative easing was used to restart economic growth in the aftermath of the 2007-08 Global Financial Crisis. The Coronavirus and associated containment measures continue to dominate investment market headlines. There are tentative signs that Italy’s situation may be improving while the U.S. and much of the rest of Europe are at earlier stages of their containment efforts. China’s economy appears to show tentative signs of restarting, albeit at a subdued pace.
Governments around the world are taking rapid action to address declining economic activity and rising unemployment. Investment markets are looking for signs of stability in Coronavirus cases, which would point to signs of a successful containment strategy and possibly pave the way for a rebound in economic activity towards the latter half of 2020.
ASSET CLASS RETURNS
Australian equity markets (S&P / ASX 200) have been relatively stable this week, returning around 3.8% after losing -13% last week. The U.S. equity market (S&P 500 in US dollars) has similarly rebounded by around 7.4% this week after losing 15% the week prior. Sovereign bonds (as given by the Bloomberg AusBond Composite 0+ Year Index) rose 0.5% over the same period.
WHAT DOES THIS MEAN FOR YOU?
If you're a Defined Benefit member:
- If your superannuation is invested in the Emergency Services Superannuation Defined Benefit Fund or the State Superannuation Defined Benefit Fund, then your entitlements are guaranteed by the Victorian State Government. Recent equity market declines will not impact your ESSSuper retirement savings.
If retirement is a while away:
- It is important to remember that superannuation is a long-term investment, which includes peaks and troughs along the way. Over the longer term, our Accumulation Plan and Income Stream Investment Options have continued to meet their return objectives. Historically, periods of negative returns are usually followed by longer periods of strong returns.
- It is important to remember that switching Investment Options to lower risk Options can permanently lock-in investment losses and miss out on the potential for higher returns by being out of the market when it recovers. As financial markets remain uncertain, it's important to remember that markets can recover quickly.
If you're nearing retirement or already retired:
- There are things to consider if you’re thinking about switching your investment options. Switching Investment Options to lower risk Investment Options may inadvertently lock-in investment losses and miss out on the potential for higher returns by being out of the market when it recovers. Market downturns, whatever their trigger may be, are inevitable and temporary. Every crisis, downturn, and recession comes to an end. And it is very likely that this crisis will be no different.
We're here to help
Our aim is to help every member achieve a comfortable and financially secure life in retirement through investment options that meet their retirement objectives over the long-term. We have a range of foundational principles that we adhere to when it comes to making these decisions. To learn more about how our investment approach works, click here.
Before you make any change to your super investment strategy, we encourage you to speak to an ESSSuper financial adviser, to book an appointment please call us on 1300 650 161 or email us at email@example.com