September 2023 Quarterly Report

Despite the ups and downs in investment markets, long-term returns have remained strong.

Investment markets naturally experience periods of both positive and negative performance. Funds SA, as investment manager of Super SA’s investment options, has positioned the portfolio to navigate through the current market and economic conditions, with long term investment objectives.

Over the past 3 months to 30 September 2023 we’ve seen increased uncertainty around inflation and interest rates. This contributed to investment markets seesawing over the quarter. Listed share markets rose in July then fell in August and September. This resulted in the Triple S Balanced Option returning -0.9% for the quarter while still providing a robust return of 9.8% over the last 12 months to 30 September 2023.

Triple S returns to 30 September 2023

Returns net of fees and gross of tax, based on Super SA unit pricing formula. 

Australian shares had an overall negative return despite a strong start to the quarter. Returns across the Australian share market were mixed. Commodity prices, in particular energy companies, rallied and iron ore was slightly higher following news that China may use stimulus to strengthen its economy. Global developed market equities ended the with slight negative performance with Information Technology sector was notably weaker. Like Australia, the international energy sector delivered positive returns. Infrastructure assets delivered modest positive returns and somewhat cushioned the diversified investment options.

Navigating prolonged market volatility

History shows that in times of economic uncertainty, we can expect investment markets to be volatile. Key concerns include rising inflation, the potential for higher interest rates, and the risk of a slowing economy.Inflation has moderated from its recent peaks but remains at elevated levels. There is anxiety in the markets that central banks may respond by raising interest rates, or keeping them higher for an extended period, to bring inflation back within target range.

High interest rates have broader consequences for the economy, affecting both consumers and businesses. The Reserve Bank of Australia is projecting lower than average economic growth over the next year. These factors are expected to lead to more fluctuations in investment performance.

Funds SA continually monitors financial markets closely and position investment options appropriately. Specifically, Funds SA has reduced our exposure to international shares in favour of cash and increased the allocation of infrastructure assets in the more defensive investment options. These assets have a history of providing steadier returns, helping to mitigate the impact of market downturns, such as those experienced in the share market.

What does this mean for your super?

When investment markets are volatile, it’s natural to become concerned about how your super is invested. It is important to remember that your superannuation is a long-term investment. Pleasingly, our investment options continue to provide strong long-term returns over 5 and 10 years, as shown in the table above.

We encourage our members to seek financial advice before making any changes to their superannuation investments. If you need help locating one, you can contact the Financial Planning Association of Australia.

If you have any questions in relation to this matter, please contact Super SA.