Energy Super Investment Update - April

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Energy Super Investment Update

Global share markets saw another very strong quarter to end of March 2021 with the Eurozone and Japan outperforming those in the UK and the US.

In Australia shares performed strongly, with the banking industry accounting for a larger share of the quarter’s return. With technology being used even more in our day to day lives as more people are working from home, we saw the tech industry and telecommunications also producing strong gains.

Consumer spending is improving in Australia with discretionary spending increasing and therefore shares producing strong returns and gains.

The Australian economy’s recovery is well underway with GDP rising by a very solid 3.1% in December quarter to just 1.1% below its level of a year ago.

Unemployment rates in Australia were down to 5.6% with more than 70,000 jobs added to the workforce in March, almost three times what was expected by some leading market economists. The economy is surging past its pre-COVID-19 levels as more than 2,000 new jobs are generated per day and fewer people than expected have sought welfare following the end of JobKeeper.

The market climate

Global share markets rose in early 2021 as the prospect for more stimulus in the U.S. and the pace of the Vaccine rollout offsetting concerns about surges in COVID cases. Australian shares also performed strongly with Banks and mining shares boosting the Australian market in the last quarter. As we know, it is all about the long term and COVID has demonstrated that there will be extraordinary events that we cannot control. No matter what is thrown our way the markets do tend to recover.

The future outlook

Interest rates are low and are expected to remain low in the short to medium term, this is encouraging consumer borrowing and positive sentiment. While the economic stimulus continues through to early next year, confidence over the next few months is expected to grow. There are still a lot of unknowns and it remains to be seen what impacts will be had and whether we see any increase in COVID-19 infections.

Consumer confidence is strong and we remain optimistic with Australia now officially out of a technical recession. Our economy has bounced back to pre-COVID levels and the outlook has improved.

The transition from the pandemic to recovery will ultimately continue to benefit some stocks like resources, industrials, financial and travel related companies.

The Australian Dollar is likely to continue to head higher on the back of rising commodity prices and falling U.S Dollar. With less lockdowns and strong rise in jobs in Australia we are seeing improvements in retail sales.

What is Energy Super doing?

Our goal remains to continue to build wealth over the long-term. Diversification allows us to remain solid during periodic setbacks as these are likely to continue to impact economic conditions.

As a medium sized superannuation fund we have well-diversified portfolios of various assets that deliver strong, long-term returns, while reducing our members’ exposure to share market volatility.

We continue to see our investment returns perform well with International Shares FYTD delivering 20.43% and Australian Shares delivering 18.86% FYTD. Below provides a snapshot of our funds’ performance financial year to date (as at 31st March 2021).

Our Stable and Capital Managed options have received high rankings for the FYTD. Below shows the performance ranking as per SuperRatings* survey as at 31st March 2021 for both Accumulation and Pension.

Accumulation

Investment option

Quarterly position/rank

FYTD position/rank

Stable

6 out of 50

1 out of 50

Capital Managed

8 out of 25

3 out of 25

Pension

Investment option

Quarterly position/rank

FYTD position/rank

Stable

5 out of 50

2 out of 50

Capital Managed

4 out of 25

2 out of 25

Note that past performance is not indicative of future performance.

Click here to view further information on our performance.

Looking ahead

We continue to look at diversification across investment options including alternatives, property, infrastructure and diversified income and in particular through renewables (wind farms) in Australia, private equity, life insurance and industrial property in Australia.

The markets are still seeing volatility and we continuously remain flexible in our approach to ensure that we can continue to ride out the highs and lows of the economy and markets. The forecast for future returns are not guaranteed.

Want to find out more?

There are a number of investment options you can consider, if you would like to access our team for single issue advice at no extra cost, please call 1300 436 374 to speak to one of our financial advisers* today. Or book an appointment.

*Energy Super offers advice through ESI Financial Services Pty Ltd (ESI FS) (ABN 93 101 428 782) (AFSL 224952), a wholly owned entity of Energy Super.

The information in this article is general information only and does not take into account your personal objectives, financial situation or needs. You should consult a licensed financial adviser to obtain financial advice that is tailored to suit your personal circumstances. For more information on your investments please visit our website www.energysuper.com.au or call us on 1300 436 374.

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