An investment update from our Chief Investment Officer, Kristian Fok
It’s safe to say 2020 is proving to be a challenging year.
In the first half of 2020 we’ve experienced devastating bushfires in Australia and a global pandemic that caused unprecedented share market movements.
Before these events, global economic activity had stabilised and was starting to slowly improve with the expectation for further improvement in 2020. The US/China trade tensions were easing and Brexit happened with both having a positive impact on share markets. Australia’s performance wasn’t as strong with weak household income growth and sluggish consumer spending and some uncertainty in the housing market. The RBA made three cuts to the cash rate across 2019 to try and lift growth.
By the end of March 2020, the global environment was very different. What started as a health crisis created an economic crisis, with share markets falling in a month what took around 15 months during the Global Financial Crisis. Whole sectors including retail, hospitality and tourism shut down overnight, as governments sought to contain the spread of the virus
Closer to home
With the benefit of a less densely populated nation, a strong healthcare system and the closure of international and local borders, Australia is closer to getting COVID-19 under control. The government announced a number of measures, such as JobKeeper, to support incomes and to try ensure that as restrictions are slowly lifted businesses can begin operating fairly quickly.
While we appear to have passed through the initial ‘eye of the storm’ as containment measures are unwound globally, uncertainty remains with the number of virus cases continuing to rise and the emergence of further waves in some regions. International trade and weak employer markets will weigh on businesses and households.
Despite these challenging conditions, the Growth (Cbus My Super) option was able to regain many of the losses experienced during the crisis to deliver a positive result for the 2019/20 Financial Year of 0.75%. Our longer term 5 and 10 year returns were 7.13% and 8.54% respectively, an important reminder that super is a long term investment.
Think for the long term
From time to time, external factors may negatively impact investment performance , but historically these periods tend to be temporary. Markets do recover and often rapidly as happened following the Global Financial Crisis. When thinking about super, it’s important that your employee’s focus on their long-term financial goals and resist the urge to make decisions based on short term ups and downs in markets.
For more information about how the coronavirus pandemic has impacted your investments, read our volatility fact sheet (PDF).
The construction and building industry will play a major role in what will be a long, nation-building recovery and Cbus is determined to play our part. We see potential opportunities to work with our key sponsoring organisations to support a pipeline of work across the industry and provide financing or other longer-term lending where it stacks up to get projects off the ground. We will work closely with Federal and State government to understand the projects they are considering and the role Cbus can play, alongside them, in the recovery.