A strong recovery 2020-21 investment market update
17 August 2021
This financial year we have delivered for members our highest return in over 10 years continuing the strong performance we achieved in tough times last year.
BUSSQ’s Balanced Growth Super and Balanced Growth Income account options have returned 17.28% and 16.61% respectively for the 2020-21 financial year (net of fees and applicable taxes).
A year on from COVID-19 lows BUSSQ started this financial year in a strong position as one of the few funds to deliver a positive return for members in 2019-20 with our Balanced Growth option returning 2.46% compared to the median return of -0.82%#
The Australian economy however started the year on a low. COVID-19 lockdowns severely impacted global growth and the Australian economy started the financial year in its first recession in 27 years. This recession was followed by a sharp recovery as stimulus was pumped into the economy.
The Reserve Bank of Australia along with Central banks globally added stimulus to their economies with a “whatever it takes” approach to help with the recovery. As the financial year progressed, we saw the focus for markets change from recession to recovery as share markets rebounded significantly.
Global shares returned around 28% in Australian dollars and the Australian share market finished this financial year over 50% higher than the low seen in March 2020. The top 200 companies on the Australian share market returned around 24%, their best financial year in more than 30 years.¹
Locally, we also saw listed companies return to making profits and move to reinstate, or even increase, their dividends which they cut in the previous year to strengthen their financial position when the Australian share market was down -7.7%.
During the year there were several other key events that impacted investment markets including increased tensions between China and the Western World, the US election and recurring COVID-19 lockdowns across multiple regions.
The increased tensions with China have particularly impacted Australia and some of the country’s key exports including barley, beef, wine, timber and coal. While these exports were negatively impacted, iron ore exports have increased with the price of iron ore reaching record levels having a positive effect on Australian mining companies.
We are not out of the woods yet. Looking ahead there are still concerns about the rate of COVID-19 hospitalisations and vaccination rates, inflation, Central banks reviewing stimulus and continued trade tensions with China. All these concerns will likely impact investment markets in the 2021-22 financial year.
¹Best since 1987: ASX bounces back strong. Australian Financial Review, 1 July 2021. #Performance comparison sourced from SuperRatings SR50 Balanced (60-76) Survey at 30 June 2020. All returns stated are net of fees and applicable taxes. Past performance is no guarantee of future performance. This information is general advice only and does not take into account or consider your personal objectives, financial situation or needs. Prepared by BUSS (Queensland) Pty Ltd (ABN 15 065 081 281, AFSL 237860) as Trustee for BUSSQ (BUSSQ Fund, ABN 85 571 332 201).