Investment market update
30 January 2023
Over the first half of the 2022-23 financial year investment markets have continued to be volatile.
BUSSQ’s Balanced Growth Super option and Balanced Growth Income account option returned 2.73% and 2.98% respectively for the financial year to 31 December 2022.
After a rollercoaster start to the financial year, throughout October and November international shares recovered as investors became more optimistic. This optimism was driven by indicators of easing inflation, hopes that central banks would slow the pace of rate hikes and US companies reporting results that exceeded expectations.
In December, this optimism felt by investors declined as hopes of economic growth in China were threatened as COVID cases surged and the US Federal Reserve strongly reaffirmed inflation (and hence interest rates) will be higher for longer.
Although this resulted in returns going down in December overall international share markets rose 9.8% and emerging market shares gained 9.7% from October to December 2022 (in US dollars)*.
Australia’s share market also rose during the second quarter by 9.1%#. The utilities sector led this solid performance by a significant margin, followed by the materials sector. Technology and consumer staples were also positive.
Australian companies with exposure to the Chinese market also benefited from the Chinese government abandoning its COVID zero policy, increasing support for its troubled property sector and injecting US$94 billion into China’s banking system.
The Reserve Bank of Australia (RBA) raised the official cash rate by 0.25% to 3.1% at its final meeting in 2022 and Philip Lowe, the RBA Governor, indicated additional rate hikes were likely. Although inflation remains high, rate hikes have eased inflation and pushed house prices down.
Looking ahead it’s expected that the current low return environment and market volatility will continue.
To help manage risks in times of volatility, BUSSQ maintains a diverse portfolio of investments within our pre-mixed options. We also actively manage our investments, closely following the market to buy, sell, or hold shares where suitable in our members’ best interests.
Investment markets naturally fluctuate but after each downturn markets eventually recover their losses and go on to achieve new highs.
During times of market volatility, it’s important to remember that your super is a long-term investment and BUSSQ’s long-term returns remain strong^.
To see our latest investment returns, visit our monthly investment performance page.
*Global share markets measured by the MSCI World Index and emerging market shares measured by the MSCI Emerging Markets Index. #Measured by the S&P/ASX 300. Investment returns are net of investment fees and costs, and taxes, and the percentage-based administration fee. ^Past performance is not a reliable indicator of future performance. Performance is only one thing to consider when choosing a super fund.