Coronavirus (COVID-19) Investment Update
09 April 2020
Since the start of 2020, particularly from the middle of February we have seen a significant amount of volatility across investment markets brought on by COVID 19.
During this time global share markets have experienced a sell off as investors have reduced exposure to shares. Share markets have reacted to concerns around COVID 19 and the increase in the rate of infections globally.
To combat the effect on share markets and global economies we have seen an unprecedented amount of stimulus from both central banks and governments.
Global central banks have made cuts to interest rates and also purchasing of government debt.
Closer to home, the Reserve Bank of Australia (RBA) announced several policies including taking interest rates to 0.25% and its first ever quantitative easing program which is the purchasing of government debt in the open market.
It is expected that interest rates in Australia will not rise until progress has been made to improve the economy and to get unemployment under control.
US S&P 500 & Australian ASX200 source: Bloomberg. From 1 July 2019 – 3 April 2020. Past performance is no indication of future performance.
As at 3 April, the BUSSQ Balanced Growth fund has returned -2.35% for the financial year to date, while the Balanced Growth Income account fund has returned -3.02%.
Many funds have experienced negative returns in this time, however due to the strategies we have in place, there has been less of an impact on BUSSQ members. We expect to come out favourably against most other funds when SuperRatings release all funds returns later this month.
The graph above demonstrates how the BUSSQ Balanced Growth fund has performed in comparison with the Australian stock market and the US stock market, and you can see how a diversified investment portfolio is beneficial, especially when markets are volatile. The difference between the Balanced Growth Income account and Balanced Growth return is due to difference in tax treatment and a different asset allocation.
Our Balanced Growth fund is invested in not only in shares, but a range of assets such as property, infrastructure, agriculture and fixed interest, and therefore has not experienced the losses that the share market has.
What we’re doing
We have been actively monitoring all asset classes and where there has been some strong performance, we have been taking profits. We are also in a position to take advantage of opportunities to buy assets at reduced prices.
Over the short term we continue to believe there will be increased volatility across markets and as such will continue to maintain a diversified portfolio to provide some protection to members retirement savings.
Talk to us before switching
If you are thinking about switching investment options due to market volatility, we encourage you to talk to us before doing so. BUSSQ provides advice over the phone at no cost about choosing investment options. Call us on 1800 692 877 for advice on switching investment options.
You can switch your investment option at any time if you are a member of Premium Choice, however you should consider any long-term ramifications that switching may have.
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 no guarantee of future performance. Prepared by BUSS (Queensland) Pty Ltd (ABN 15 065 081 281, AFSL 237860) as Trustee for BUSSQ (BUSSQ Fund, ABN 85 571 332 201). BUSSQ owns Skylight Financial Solutions Pty Ltd (ABN 46 076 835 848, AFSL 450139), the company that provides financial advice to our members.