22 August 2019
For the 2018/19 financial year, the Fund’s Balanced Growth option has returned 4.89%. With inflation at 1.6%, this amounts to real returns of 3.29%. Over the longer term the Fund’s Balanced Growth options has return 8.80% pa over 10 years.
During the financial year we saw a continuation of growth across the global economy however towards the second half of the year we started to see cracks appearing suggesting that growth was slowing. In response to this, Central Banks moved from talk of raising rates prior to Christmas to holding rates for longer in January and promising to cut if needed in February/March.
In Australia we saw the economy weaken as the year progressed leading the Reserve Bank of Australia (RBA) to cut rates in June, the first cut in 3 years.
The RBA saw that there had been a marked slowdown in the Australian economy with weak wage growth, falling house prices and inflation remaining at levels well below the target of 2%– 3%.
Globally the main themes affecting markets over the last 12 months have been:
• Continuation of trade tensions between the US and China
• Low interest rates have led investors looking for income into high yielding equities
• Deteriorating outlook for company earnings
Since the beginning of the 2019/20 financial year we have experienced quite volatile markets both in Australia and overseas. This volatility has been driven predominantly by the continuation of the trade tensions between the US and China and the uncertainty around Brexit. We expect this uncertainty to remain at least in the short term. We continue to maintain a diversified portfolio with the goal to minimise exposure to any one particular risk during periods of weakness.