Each of Qantas Super’s investment options ended 2019 on a high note.

According to Qantas Super investment manager Chris Grogan, both the Australian and global share markets, along with private equity and timberland, performed particularly well through the December quarter.

These investments contributed to healthy returns for each of Qantas Super’s non-Cash investment options for the year and three years to 31 December 2019, illustrated in the chart below.

Performance for super accounts

As at 31 December 2019 – all returns are per annum and after investment fees.

  • 1 year
  • 3 years

Past performance is not a guarantee of future performance.

The market ended 2019 on a high, completing a turnaround from the sell-off in the December 2018 quarter. The contrast between the two quarters highlights the strengths of Qantas Super’s approach to managing your super.

It’s an approach that helps protect your super from downturns, and capitalise on periods of growth.

Your investment options are meeting their long-term objectives

As at 31 December 2019 – all returns and objectives are per annum and after investment fees.

Investment optionReturn objectiveActual returnReturn objectiveDifference
Glidepath: Take-offCPI +5% p.a. over 10 years9.8% (3 year p.a. return)6.8%+3.0%
Glidepath: AltitudeCPI +4% p.a. over 7 years8.6% (3 year p.a. return)5.8%+2.8%
Glidepath: CruisingCPI +3.5% p.a. over 6 years8.1% (3 year p.a. return)5.3%+2.8%
Glidepath: DestinationCPI +3% p.a. over 5 years7.1% (3 year p.a. return)4.8%+2.3%
AggressiveCPI +5% p.a. over 10 years8.2% (10 year p.a. return)6.8%+1.4%
GrowthCPI +4% p.a. over 7 years8.3% (7 year p.a. return)5.9%+2.4%
BalancedCPI +3% p.a. over 5 years6.0% (5 year p.a. return)4.8%+1.2%
ConservativeCPI +2% p.a. over 3 years5.7% (3 year p.a. return)3.8%+1.9%
CashBloomberg AusBond Bank Bill over 1 year1.7% (1 year p.a. return)1.5%+0.2%

As Glidepath was established on 1 October 2015, only three year returns are shown for these options. Past performance is not a guarantee of future performance.

What's behind the numbers?

Want to know the stories behind the numbers? We had Chris talk us through the latest market activity and what’s on the horizon:

ASX reaches record peak

The Australian share market has had a strong start to the new decade, with the ASX 200 hitting a record 7,041.4 points in January.

It comes after the index, which is generally regarded as one of the key benchmarks for the Australian market’s performance, reached its pre-GFC peak in July last year.

While a cause for celebration for some, for others reaching a peak or record means a bubble may be about to burst and there’s nowhere to go but down. However, Chris said it’s important to look beyond the headlines.

“Over the very long term, shares are generally one of the better-performing investments. Like all things, they have ups and downs, but I don’t think the fact they’ve gone over a certain level is a reason to be scared,” Chris explained.

“At the same time, it’s not a reason to celebrate, either. The reality is just that the market has gone over a number that took 11 or 12 years to beat.”

With this in mind, Chris said we can look to the US market for some guidance.

“While there are some differences, the US market exceeded its pre-GFC peak years ago and has continued to grow,” he said.

“Just because it’s gone over a historical peak, doesn’t mean it’s going to fall.”

Interest rates kept steady as growth picks up

The Reserve Bank of Australia [RBA] has kicked off 2020 by opting to keep the official cash rate on hold at 0.75 percent at its February meeting.

In announcing the decision, RBA governor Philip Lowe stated that the outlook for the global economy “remains reasonable”, with measures put in place last year taking effect.

“There have been signs that the slowdown in global growth that started in 2018 is coming to an end. Global growth is expected to be a little stronger this year and next than it was last year and inflation remains low almost everywhere,” he explained.

“The easing of monetary policy last year is supporting employment and income growth in Australia and a return of inflation to the medium-term target range. The lower cash rate has put downward pressure on the exchange rate, which is supporting activity across a range of industries.”

Chris said the Investments team will be keeping an eye on how global growth is picking up, and how to leverage this to help grow your super.

How the market deals with uncertainty

If there’s one thing the market doesn’t like, it’s uncertainty – particularly when it comes to scenarios it has never dealt with before.

For example, the uncertainty over new will-they-won’t-they issues such as Brexit and the US-China trade deal caused a fair degree of angst over the last year.

While all the terms of the trade deal and what they will mean remain to be ironed out, the fact that Phase 1 of the deal has been signed and announced is enough to provide the market with the degree of confidence it needs to go about its business.

Similarly, though the details of what Brexit will actually mean for the UK remain to be seen as the UK and the European Union move into a transition period of 11 months, the UK’s official ‘departure’ from the EU on January 31 has provided an element of certainty that the market appreciates.

However, with these two issues achieving a degree of resolution, the coronavirus arrived just in time to become the market’s latest cause for concern.

But unlike Brexit or the US-China deal, which were new scenarios, Chris believes the virus is unlikely to have any lasting effects on the market beyond the short term. Part of this is because, while it is a new virus, it’s something the market has seen before.

Over the last 20 years alone, the world has experienced outbreaks including SARS, Ebola, and Swine Flu, and contained all of them.

“This is not uncommon. It’s happened before, so I think we have to maintain some optimism,” Chris said.

Thinking about switching your investment options?

A Super Adviser can help you assess what option is right for you based on your unique situation and goals. You can speak with an adviser over the phone or face to face at no additional cost.

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