Thinking long term
Following strong returns in 2016 and 2017, global share markets had mixed returns throughout 2018. After a volatile start to the year, markets appeared to recover throughout June to September before sharper falls in the last quarter.
As the Growth (Cbus MySuper)* option has around half its investments in shares, this has impacted the shorter term returns for this option and other Cbus investment options that have shares.
Several factors have contributed to the recent share market falls, including higher interest rates in the US after many years of very low interest rates, slowing global economic growth, an escalation in the US/China trade tensions and uncertainty about whether the UK will successfully exit the European Union. The global economic outlook for 2019 and 2020 is now less positive, and strong returns from share markets over the short to medium term seem unlikely.
The weaker returns from share markets in 2018 follow a couple of years of strong returns which is reflected in Cbus’ longer-term results. While the recent period of falling share markets may have been a concern for members, it is important to maintain a longer-term focus when considering superannuation. Periods of negative returns will occur from time to time and Cbus’ investment options are designed with this in mind. In particular, they include a range of asset classes (such as property and infrastructure) to provide more stable returns than investing in just shares.
In addition, the Investment Team assess the market outlook on a regular basis and may make changes to manage risk.
*The Growth (Cbus MySuper) return is based on the crediting rate, which is the return minus investment fees, the Trustee Operating Cost and taxes. Excludes account keeping administration fees. Past performance is not a reliable indicator of future performance. The average balanced fund return (median) is from the SuperRatings SR50 Balanced Survey, December 2018. Survey data as at 21 January 2019.