Investment market volatility continues – 30 September 2022 update
Posted 9 November 2022
Super fund returns to 30 September 2022
With ongoing significant volatility and falls across major asset classes such as shares and bond markets, the majority of super funds continued to suffer negative returns over the quarter and 12 month period to 30 September 20221.
Our Accumulate Plus Balanced (MySuper) option returned -5.59% over the 12-month period to 30 September, slightly higher than the median return of MySuper options of -5.742%.
Investment market overview
The drivers of the continued volatility in investment markets remain the same. Actions of central banks aiming to curtail inflation through lifting official cash rates, along with broader geopolitical risks predominately being the Ukraine war, are creating concerns over a slowdown in global economies. More recently, fears of a recession in many countries are surfacing.
Australia’s central bank, the Reserve Bank of Australia (RBA), has a long-term target range for inflation of 2% to 3%. With the aim of curbing excess inflation, the RBA lifted cash rates three times over the September 2022 quarter, with two rate rises since in early October and November. These rates rises have taken Australia’s official cash rate from 0.10% in April 2022 to 2.85% at 2 November 20223.
Similar central bank actions occurred across other countries such as the US where inflation is even more rampant than in Australia. China is one of the few countries not experiencing material inflationary pressures due to its slowing of the economy from ongoing Covid lockdowns and its property market crisis.
Share markets performed strongly at the start of the quarter but fell sharply by the end. Global shares4 performance was -1.7% over the quarter and -12.7% over the year to 30 September 2022. Australian shares5 had a slightly positive return for the quarter at 0.45% but returned -8.0% for the 12 months.
Historically bond markets would generally cushion share market falls; however, they too continued to fall across the globe. Global performance6 was down to -3.5% over the quarter and around -12.8% over the past year.
We expect the current volatility to continue over the short to medium term and are mindful of the potential for lower and negative returns over the short to medium term as central banks continue to tackle high inflation.
1 Information published by SuperRatings Pty Ltd ABN 95 100 192 283, AFSL 311880 as part of its monthly Fund Crediting Rate Survey (FCRS). For the 30 September 2022 quarter 41 of 48 MySuper options, and for the year ended 30 September 2022 48 of 48 MySuper options posted negative returns within the SR50 MySuper Index.
2 Information published by SuperRatings Pty Ltd ABN 95 100 192 283, AFSL 311880 as part of its monthly Fund Crediting Rate Survey (FCRS) including the SR50 MySuper Index median returns to 30 September 2022.
4 Measured by the MSCI ACWI ex Australia Net 25% Hedged Index. The MSCI data is comprised of a custom index calculated by MSCI for, and as requested by, the trustee of Commonwealth Bank Group Super. The MSCI data is for internal use only and may not be redistributed or used in connection with creating or offering any securities, financial products or indices. Neither MSCI nor any other third party involved in or related to compiling, computing or creating the MSCI data (the ‘MSCI Parties’) makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and the MSCI Parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to such data. Without limiting any of the foregoing, in no event shall any of the MSCI Parties have any liability for any direct, indirect, special, punitive, consequential or any other damages, including lost profits) even if notified of the possibility of such damages.
5 Measured by the S&P/ASX 300 Accumulation Index. The S&P/ASX300 is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and has been licensed for use by Commonwealth Bank Officers Superannuation Corporation (CBOSC). CBOSC products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and do not make any representation regarding the advisability of investing in such products nor do they have any liability for any errors, omissions, or interruptions of the S&P/ASX300.
6 Measured by the Bloomberg Barclays Global-Aggregate Bond TR Hedged AUD Index. Bloomberg® and Bloomberg Global Aggregate Hedged AUD are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the index (collectively, “Bloomberg”) and have been licensed for use for certain purposes by the trustee of Commonwealth Bank Group Super (“the trustee”). Bloomberg is not affiliated with the trustee, and Bloomberg does not approve, endorse, review, or recommend any trustee’s Accumulate Plus or Retirement Access products. Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to the trustee’s Accumulate Plus or Retirement Access products.
7 Advice is provided by Mercer Financial Advice (Australia) Limited (ABN 76 153 168 293, AFSL 411766).
This article was issued on 9 November 2022 by Commonwealth Bank Officers Superannuation Corporation Pty Limited (the trustee) (ABN 76 074 519 798, AFSL 246418), the trustee of Commonwealth Bank Group Super (the fund) (ABN 24 248 426 878). Past investment performance is not a reliable indicator of future performance. This document may include general advice but does not take into account your individual objectives, financial situation or needs. When assessing whether the information is appropriate for you, please consider the Product Disclosure Statement (PDS) and Reference Guides available from our website oursuperfund.com.au/pds. You should also consider seeking professional financial advice before finalising any decisions that may affect your financial future.
