Market Overview

Market Overview – September Quarter 2022

Investment markets started the financial year up and then fell sharply. Returns across all the diversified investment options ended slightly negative for the 3 months to 30 September.

All diversified investment options had positive returns in July with investment markets looking through challenges such as the energy crisis in Europe and the Russia/Ukraine war. In August and September, a higher-than-expected inflation print sparked a fall in Equities and bonds. Over the 3 months, global equities and bonds fell -4.4% and -3.4% respectively.

Fixed Interest traditionally plays a defensive role in investment options but has recently been less effective in dampening negative returns for the more defensive investment options. This is because of the sharp rise in interest rates and high inflation lead to bond prices falling. Looking through short-term returns, history shows that staying invested in diversified portfolios grows member’s retirement balances overtime.

Funds SA, Super SA’s investment manager, uses portfolio diversification in anticipation of volatile markets and active management to adapt where appropriate. The goal is to reduce the risk in the investment options which helps cushion the impact on members balances as investment markets fall. The advantage of diversification can be seen in the 3-month performance with unlisted assets cushioning the negative returns from listed assets.


Triple S returns to 30 September 2022 

Investment option

 3 months
      %

    1 year
       %

   3 years
    % p.a.

  5 years
   % p.a.

 10 years
   % p.a.

Cash

     0.4

      0.5

      0.4

     1.0

     1.8

Capital Defensive

    -0.7

     -7.3

     -0.2

     2.0

     3.5

Stable

    -0.9

     -8.2

      0.6

     3.0

     4.9

Moderate

    -0.9

     -8.0

      1.7

     4.0

     6.2

Socially Responsible

    -0.5

     -8.4

      3.2

     5.5

     7.4

Balanced

    -1.0

     -8.7

      3.3

     5.5

     7.7

High Growth

    -0.9

     -8.6

      3.9

     6.3

     9.1

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

Your superannuation will rise and fall with investment market cycles. The Super SA investment options are invested across different assets to lessen the impact of market gyrations over time. The investment options take a long-term investment outlook to help position the portfolios for difficult market conditions.

Over a 10-year investment horizon Super SA members have experienced positive returns, with the default Balanced option returning 7.7% p.a. to 30 September 2022.

Economic update

Central banks have been explicit in prioritising bringing inflation back to target. Over the quarter, the Reserve Bank of Australia raised rates by 1.5%, The US Federal reserve decided to raise rates by 1.5%, and the Bank of England to raised rates by 1.0%. Central banks are clearly willing to sacrifice economic growth to reduce inflation. The Fed noted their fight against inflation is likely to require a sustained period of below-trend growth and there will very likely be some softening of labour market conditions. The trade-off between economic growth and inflation is becoming more apparent, and the probability of a policy induced recession is increasing. A recession is a risk to equity markets because companies’ earnings are expected to fall as the economy weakens.

Governments around the world are reacting differently to the cost of living increasing with higher food, energy, and rental payments. In the UK, the Government attempted to stimulate the economy through increasing debt. This led to equity market selloffs as it seemed at odds with the inflation combatting actions by the Bank of England (BoE).

History shows that in times of economic uncertainty, we can indeed expect share markets to be volatile, however, this shouldn’t change your long-term investment strategy. While market ups and downs can make you question your investment plan, it’s important to remember that superannuation is a long-term investment. Your super will rise and fall with investment market cycles over time, but history has shown that markets increase in value over the long-term.

If you’re concerned about your investment options, we recommend that you speak with your financial planner for personalised and professional advice.
Learn more about financial planning and advice options

Find out more: Investment objectives and performance.

 

The superannuation schemes administered by Super SA are exempt public sector superannuation schemes and are not regulated by the Australian Securities and Investments Commission (ASIC) or the Australian Prudential Regulation Authority (APRA). Super SA is not required to hold an Australian Financial Services Licence to provide general advice about a Super SA product. The information in this publication is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Super SA recommends that before making any decisions about its products you consider the appropriateness of this information in the context of your own objectives, financial situation and needs, read the Product Disclosure Statement (PDS) and seek financial advice from a licensed financial adviser in relation to your financial position and requirements. 

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