Monthly highlights

  • The Growth (Cbus MySuper) option returned 0.99% for the month of May and 18.54% for the 12 months ending 31 May 2021.
  • Australian and Global shares delivered returned of 1.34% and 1.05% (hedged) respectively.
  • The Reserve Bank of Australia left the cash rate unchanged at 0.10% in its meeting on 5 May. 

Super Investment Option Performance (crediting rate)

 

  Cash Savings Conservative Conservative Growth* Growth (Cbus MySuper) High Growth
1 month 0.02% 1.12% 1.64% 2.30% 2.67%
FYTD  0.12% 6.77% 12.55% 19.34% 25.95%
1 Year 0.12% 6.77% 12.55% 19.34% 25.95%
5 Years p.a. 1.12% 5.35% n/a 9.81% 12.09%
10 Years p.a. 1.84% 5.95% n/a 9.55% 10.99%
Funds managed ($m) 900.12 1,034.97 739.64 54,100.03 4,134.49

*The Conservative Growth accumulation option commenced on 6 July 2017.

Transition to Retirement Option Performance (crediting rate)

 

  Cash Savings* Conservative* Conservative Growth* Growth*
High Growth*
1 month 0.03% 1.12% 1.64% 2.27% 2.68%
FYTD  0.13% 6.78% 12.58% 19.02% 26.02%
1 Year 0.13% 6.78% 12.58% 19.02% 26.02%
5 Years p.a. n/a n/a n/a n/a n/a
10 Years p.a. n/a n/a n/a n/a n/a
Funds managed ($m) 8.55 18.43 162.76 159.78 24.47

*These options commenced on 1 July 2017. 

Fully Retired Option Performance (crediting rate)

 

  Cash Savings Conservative Conservative Growth* Growth High Growth
1 month 0.03% 1.18% 1.74% 2.39% 2.77%
FYTD  0.14% 7.16% 13.98% 21.00% 28.75%
1 Year 0.14% 7.16% 13.98% 21.00% 28.75%
5 Years p.a. 1.40% 6.02% 8.65% 10.92% 13.40%
10 Years p.a. 2.24% 6.74% n/a 10.69% 12.28%
Funds managed ($m) 81.16 593.39 1,744.57 1,189.23 134.80

**The Conservative Growth Income Stream option commenced on 1 December 2013.

Market overview

The Delta wave: 

Following the subsidence of the large wave of COVID-19 infections in India, global case numbers troughed in June but have since been accelerating once again as the more transmissible Delta variant spreads in a large number of countries. So far, the impact of the Delta wave has varied considerably. In countries with high vaccination rates, such as the UK, US and many European countries, the virus has so far resulted in only small increases in the number of severely sick people (those who require hospitalisation). This has meant only minor increases in restrictions have been necessary. In the UK and many regions of the US, reopening has progressed even with a large acceleration in case numbers.

However, in other countries where vaccination numbers are lower (or where less effective vaccines have been used), populations are more vulnerable both to the spread of the virus and the health impacts for those infected. This group of countries largely consists of Emerging Market (EM)1 economies such as Indonesia and South Africa. But developed economies such as Japan, South Korea, and now Australia are also experiencing outbreaks and have had to tighten restrictions.

The Delta variant is already slowing the recovery in a number of places around the world. There is also the risk that high-vaccination countries will have to reverse their reopenings if the number of severely sick people rises too far.

The great exit: Central Bank’s new challenge

Despite the Delta wave of infections, we’ve seen a number of major economies start to move back toward normal over the past few months, thanks to the COVID-19 vaccination campaign and easing of lockdown restrictions. And with that, governments and central banks around the world have started to dial back the emergency stimulus measures that were used to keep economies alive throughout the pandemic. 

Turning the tap off stimulus remains somewhat of a juggling act, as much of it has ended up in cautious consumers’ bank accounts. So, there is a focus for central banks to keep interest rates low to encourage spending. However, policymakers also don’t want to over-stimulate their economies and risk an overshoot of inflation2.  

So far, we have already seen the Bank of Canada and the Reserve Bank of New Zealand announce a reduction in the pace of their quantitative easing3 bond purchases. In New Zealand bond purchases have been stopped altogether and interest rate increases now look likely sometime in the next few months. In Australia, the Reserve Bank of Australia (RBA) had announced that its bond purchases would slow from September, although this plan is likely to be reconsidered following the recent lockdowns.

As usual, global markets’ main focus is on the US Federal Reserve, where the decision-making Committee are starting to discuss a reduction in the scale of bond purchases (known as ‘tapering’), which will likely be announced before the end of 2021. The Committee’s members also recently brought forward their (median) expectation of the first interest rate increase from 2024 to 2023, following continued progress in the labour market recovery and some higher-than-expected inflation readings.

1 - An emerging market economy is the economy of a developing nation that is becoming more engaged with global markets as it grows. The International Monetary Fund (IMF) classifies 23 countries as emerging markets, which include the likes of China, India and Brazil.

2 - Inflation is an increase in the level of prices of the goods and services that households buy. Typically, prices rise over time; 2-3% each year is expected, and low interest rates can affect the rate of natural growth of this. Learn more here.

3 - When a central bank decides to use Quantitative Easing (QE), it makes large-scale purchases of financial assets, like government and corporate bonds and even stocks. This relatively simple decision triggers powerful outcomes: The amount of money circulating in an economy increases, which helps lower longer-term interest rates. This lowers the cost of borrowing, which spurs economic growth.

Asset allocation

The Strategic Asset Allocations for all investment options can be found on the following pages:

The Actual Allocation for the Growth (Cbus MySuper) option is shown below.

 

Actual allocation 30/06/2021 Growth (Cbus MySuper)
Australian shares 22.60%
Global market shares 27.26%
Emerging market shares 6.44%
Private equity 2.74%
Alternative growth 1.56%
Infrastructure 10.83%
Property 10.62%
Mid-risk alternatives 6.13%
Fixed interest 5.84%
Cash 6.00%
Growth / Defensive allocation split 74.38% / 25.62%

Note: Growth assets include Australian Shares, International Shares, Private Equity, Alternative Growth, 50% of Infrastructure, 50% of Property and 50% of Mid-Risk Alternatives. Defensive assets include Cash, Fixed Interest, 50% of Infrastructure, 50% of Property and 50% of Mid-Risk Alternatives.

Figures are subject to rounding. Actual asset allocation is current as at 31 July 2020. Asset classes are the building blocks of our investment options. We allocate different proportions to each asset class with the aim of meeting each option’s investment risk and return objective. By investing across a range of asset types, the risk of loss is reduced through diversification. 

For more information see asset classes.

We periodically review our investment strategy and believe that the Growth (Cbus MySuper) option is well positioned for growth over the medium to long term, while maintaining some defensive exposure. Cbus’ investment options, with the exception of the Cash Savings option, are broadly diversified across asset classes.

 

Glossary

Investment type Market index

Australian shares

S&P ASX 300 Accumulation Index

Global shares – currency hedged

MSCI All Countries World Ex-Australia Index (Hedged, $A)

Global shares – currency unhedged

MSCI All Countries World Ex-Australia ($A)

Emerging markets – currency unhedged

MSCI Emerging Markets ($A)

Australian unlisted property

MSCI/IPD Australian Property Pooled Index

Australian bonds

Bloomberg AusBond Composite Bond Index

Global bonds

Citi World Government Bond Index (Hedged, $A)

Australian cash

Bloomberg AusBond Bank Bill Index

Disclosure

Past performance is not a reliable indicator of future performance. All Cbus performance and return figures disclosed in this investment update are based on the crediting rate, which is the return minus investment fees, the taxes, and until 31 January 2020, the percentage-based administration fee. Excludes fees and costs that are deducted directly from members’ accounts.

The information is about Cbus. It doesn’t take into account your specific needs, so you should look to your own financial position, objectives and requirements before making any financial decisions. Read the Cbus Product Disclosure Statement to decide whether Cbus is right for you, or call 1300 361 784 for a copy.