Market update 2018-19 financial year
22 August 2019
For the 2018-2019 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 2019-2020 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.
Prepared by BUSS (Queensland) Pty Ltd (ABN 15 065 081 281, AFSL 237860) as Trustee for BUSSQ (BUSSQ Fund, ABN 85 571 332 201). This information is general advice only and does not take into account or consider your personal objectives, financial situation or needs. Before acting, you should review the relevant Product Disclosure Statement to ensure you have all the information about the relevant BUSSQ product and how it works and consider the appropriateness of the information to your needs or seek independent advice from a properly qualified professional. Past performance is not a reliable indicator of future performance.