Investment insights

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

Chris explained that it’s likely to be a short-term market over the coming months, with ups and downs expected: will inflation go higher or settle, is there a risk of recession, will tensions in the Middle East escalate? These are just a few examples of the key issues driving volatility over the short term.

It’s important to remember during these times that your super is a long-term investment, and that each of our investment options, except Cash, has an investment horizon of at least three years, which gives your super time to weather market fluctuations like this.

While it may be tempting to change your strategy when you see share markets falling, in the long run it can make more sense to either stay invested or consider investing more. By changing to a lower risk option in a downturn, you risk selling out at a time when prices are low, rather than taking advantage of falls before markets recover.

Qantas Super’s approach to managing your super helps to both capitalise on periods of growth and protect your super through periods of market uncertainty. We’re able to do this through our focus on investing for the long-term and being well-diversified by building portfolios with investments that complement each other.

This means your super is not just invested in the share market; it is invested across thousands of investments such as shares, property, infrastructure, agriculture, a variety of bonds, and cash. Having your super spread across these different types of investments is designed to smooth the ups and downs that may be experienced by any one category of investment type, and allow your super to keep performing in the long-term.

A Super Adviser can help you determine which investment options may be right for you. You can book a one-on-one chat in person or over the phone at a time that’s convenient for you. It’s included as part of your membership so there’s no extra cost.

While the impact on markets arising from the conflict between Russia and the Ukraine are now largely priced in by investors, Chris explained that the uncertainty from the conflict in the Middle East could lead to additional uncertainty in markets.

The human toll is, of course, the most important factor and our thoughts are with everyone affected.

However, our Investment team is keeping an eye on the effect of the conflict on markets and in turn, your super. Given the potential for escalation within the Middle East there is a risk that oil prices increase; Qantas Super has exposure to the energy sector.

The World Bank stated in its Commodity Markets Outlook at the end of October 2023 that, if the conflict escalated, the price of oil could move into “uncharted waters”. However, the organisation stated, that the conflict has had “only modest impacts” on commodity prices so far, which may reflect the global economy’s improved ability to absorb oil price shocks”. In fact, oil prices fell in early November 2023.

Any impact on oil and commodity prices would further drive-up inflation, which has remained high across Australia and the United States.

In turn, the Board of the Reserve Bank of Australia (RBA) increased the cash rate by 25 basis points to 4.35 percent at its November 2023 meeting. In announcing the increase, the RBA’s new governor, Michele Bullock, said that “high inflation makes life difficult for everyone and damages the functioning of the economy”.

“[If] high inflation were to become entrenched in people’s expectations, it would be much more costly to reduce later, involving even higher interest rates and a larger rise in unemployment.”

In the meantime, high inflation continues to have an impact on CPI+ return objectives for most super funds.

As we explained last quarter, the sharp rise in CPI over the last year is being felt more keenly by the options with a time horizon of five years or less, while options with a longer time horizon continue to exceed their stated objectives. However, the results will shift as inflation (hopefully) slows down.

As Qantas Super begins to explore merger options, our Investment team remains focused on finding interesting opportunities that will deliver strong returns for members.

The team is going from strength to strength, with Katharine Walters, the former Chief Impact Officer at profit-for-purpose fund Inspire Impact, joining Qantas Super in November 2023.

Katharine is an experienced ESG and impact practitioner, with 20 years of practical experience in corporate sustainability and responsible investing. Katharine’s areas of expertise include sustainability strategy, assessment, reporting and assurance, with a background in green building and a particular focus on impact investing. Qantas Super is excited to have her join the team to help us achieve our net zero and social impact goals.

On that front, the team has lined up a new investment opportunity in a not-for-profit social impact manager focused on aged care. This will further diversify exposure to a range of impact investment themes including skills education, mental health, disability, and social and affordable housing.