Information on managing and accessing your super through COVID-19

Each of Qantas Super’s investment options performed well in the September quarter.

According to Qantas Super investment manager Chris Grogan, bonds and ‘real’ assets including property infrastructure, agriculture, and timber performed well through this period.

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

Performance for super accounts

As at 30 September 2019 – all returns are per annum and after investment fees.

  • 1 year
  • 3 years

Past performance is not a guarantee of future performance.

The solid performance for Qantas Super’s investment options, each of which have outperformed their objectives, highlights the strength of Qantas Super’s approach to investing your money.

As Chris explained, our focus on investing for the long term and being well diversified by building portfolios with investments that complement each other, has allowed your super to keep performing through this most recent period of market uncertainty.

Your investment options are meeting their long-term objectives

As at 30 September 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 years10.3% (3 year p.a. return)6.8%+3.5%
Glidepath: AltitudeCPI +4% p.a. over 7 years8.9% (3 year p.a. return)5.8%+3.1%
Glidepath: CruisingCPI +3.5% p.a. over 6 years8.4% (3 year p.a. return)5.3%+3.1%
Glidepath: DestinationCPI +3% p.a. over 5 years7.4% (3 year p.a. return)4.8%+2.6%
AggressiveCPI +5% p.a. over 10 years8.3% (10 year p.a. return)6.8%+1.5%
GrowthCPI +4% p.a. over 7 years8.5% (7 year p.a. return)5.8%+2.7%
BalancedCPI +3% p.a. over 5 years6.1% (5 year p.a. return)4.7%+1.4%
ConservativeCPI +2% p.a. over 3 years5.9% (3 year p.a. return)3.8%+2.1%
CashBloomberg AusBond Bank Bill over 1 year1.8% (1 year p.a. return)1.7%+0.1%

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:

Australian residential property prices continue to rebound

While they have not yet arrived back at their peak, Australian house prices have continued their rebound.

Helped along by three interest rate cuts from the Reserve Bank of Australia [RBA] in just five months, data from real estate analytics provider CoreLogic found the median house price in October grew by 1.7% in Sydney, and 2.3% in Melbourne. This is the biggest increase for Melbourne since 2009.

House prices are often viewed as an indicator of the economy’s health, because they relate to consumer confidence. Even if a homeowner is not looking to sell, Chris explained, their confidence can be buoyed knowing the value of their property is going up.

This is because, as the value of a homeowner’s property rises, so too does the proportion of equity to debt they have in the property.

“As the proportions change, people may feel happier and more comfortable, and maybe more inclined to spend money, which flows through to consumer confidence,” Chris said.

For some consumers, however, the RBA’s rate cuts may be a sign of the economy’s weakness. Their full impact will take time to be felt in the economy, with Chris explaining this may take up to 18 months.

“There’s no instant gratification with these things,” he said.

In the short term, economists will look at retail sales over the Christmas and New Year period as another indicator of how Australians feel about the economy and their finances.

The US economy

The ‘inverted yield curve’ that caused such a stir just a few short months ago has become less inverted.

An inverted yield curve occurs when short-term interest rates are higher than long-term interest rates; global markets were concerned because it has historically been a possible precursor to slower economic growth or a recession.

The partial reversion follows several rate cuts from the Federal Reserve, the country’s central bank, and strong consumer spending.

Speaking in October, Chair of the US Federal Reserve, Jerome Powell said, “Overall, we see the economy as having been resilient to the winds that have been blowing this year.”

One of the winds that has been blowing persistently through the year is the uncertainty around a trade deal between China and the US. With talks again underway, our investments team will keep a close eye on developments as the two countries work towards an agreement on “phase one” of a deal.

Europe's central bank cuts rates

As it continues to deal with a sluggish economy, the European Central Bank (ECB) cut the deposit rate to a record low of minus 0.5 percent in September.

It first cut rates below zero in 2014, following years of ‘austerity’ measures introduced in the wake of the 2008 financial crisis.

These measures saw governments across Europe cut their spending in the hopes of reducing their budget deficits.

In a negative rate environment, you are in effect paying to keep your money in the bank instead of getting money to have it there – this means you will get less money back than you put in.

So why would a central bank push rates into negative territory?

As Chris explained, the ECB is trying to spur growth by encouraging people to put their money into investments that will help the economy, rather than keeping it in the bank. This could be property, or debt investments that will be used to push the growth of businesses and employment.

While this unusual approach to interest rate policy has risks, investors have tended to react positively when central banks around the world have reduced interest rates or undertaken other accommodative measures.

This is because lowering the cost of debt should stimulate the economy and this tends to result in risky assets appreciating in value; this is evidenced through higher property prices and a higher stock market, for example.

These conditions have resulted in Qantas Super’s investment options continuing to generate attractive absolute returns.

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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