Monthly Market Overview
Monthly Market Overview – April 2022
Section Heading
Returns across all investment options during April were negative as investment markets continued to navigate a range of challenges.
Key drivers of investment performance:
- The International Equities asset class was the common key detractor to returns.
- Fixed Interest asset classes were negative as bond prices fell, with markets pricing expectations for higher interest rates.
- The alternative assets within Diversified Strategies Income, along with Property, provided some cushioning to the negativity.
- Diversified Strategies Growth offered small positive returns for the growth-oriented investment options as Private Markets benefited from the receipt of December and March quarter valuations.
- The Reserve Bank of Australia (RBA) kept the Official Cash Rate (OCR) at its historic low, however, the market is pricing a historically aggressive tightening cycle with the OCR expected to increase from 0.10% to 2.50% by the end of the year.
- At the time of writing, the RBA had increased the OCR from 0.10% to 0.35% (3 May 2022).
Triple S returns to April 2022
|
Investment option |
3 months |
FYTD |
1 year |
3 years |
5 years |
10 years |
|
Cash |
0.0 |
0.0 |
0.0 |
0.5 |
1.1 |
1.9 |
|
Capital Defensive |
-3.2 |
-3.8 |
-2.8 |
1.8 |
2.9 |
4.3 |
|
Conservative |
-3.2 |
-3.4 |
-1.7 |
3.2 |
4.2 |
5.8 |
|
Moderate |
-2.7 |
-2.1 |
0.4 |
4.7 |
5.5 |
7.1 |
|
Socially Responsible |
-2.3 |
0.7 |
4.7 |
7.2 |
7.3 |
8.4 |
|
Balanced |
-2.5 |
-1.3 |
2.1 |
6.9 |
7.3 |
8.7 |
|
High Growth |
-2.3 |
-0.5 |
3.3 |
7.6 |
8.3 |
10.1 |
Returns net of fees and gross of tax, based on Super SA unit pricing formula.
Financial markets
April was broadly negative for investment markets as investors continued to navigate the challenges of:
- the ongoing Russia-Ukraine conflict and the impact on energy prices
- lockdowns in China, impact on economic growth and already stretched supply chains
- higher inflation
- significantly tighter monetary policy.
Inflation and central bank actions dominated the market environment. Central banks, and consequently markets, continued to ramp up expectations for bigger jumps in official policy rates to combat escalating inflation. Major central banks signalled the potential for larger rate hikes at their May meetings, with elevated inflation creating a sense of urgency for central banks.
Australian inflation hit a 20-year high and it was viewed this print would hold significant weight in the RBA’s decision on timing to move rates. At the time of writing, the RBA had increased the OCR from 0.10% to 0.35% on 3 May.
The heightened central bank action led to bond market volatility, also impacting equity markets.
International equity markets finished the month in negative territory with poor earnings season results from big name stocks, such as Netflix, Google, Facebook, Amazon, and Apple, driving the majority of negative performance.
The Australian equity market was also negative, albeit only slightly. Our market provided somewhat of a cushion to returns given the dominance of the big banks (which tend to do well in a rising rate environment) and commodities stocks benefiting from rising commodity prices.
Disclaimer
The information in the article above has been prepared in good faith by Funds SA. However, Funds SA does not warrant the accuracy of the information and to the extent permitted by law, disclaims responsibility for any loss or damage of any nature whatsoever which may be suffered by any person directly or indirectly through relying upon it whether that loss or damage is caused by any fault or negligence of Funds SA or otherwise. The information is not intended to constitute advice and persons should seek professional advice before relying on the information.