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% 0.68% 0.70% 0.99% 1.13%
FYTD  0.10% 5.58% 10.74% 16.66% 22.68%
1 Year 0.10% 6.12% 11.98% 18.54% 25.36%
5 Years p.a. 1.14% 5.16% n/a 9.15% 11.68%
10 Years p.a. 1.86% 5.87% n/a 9.35% 10.68%
Funds managed ($m) 917.19 1,028.41 717.00 52,623.21 3,933.88

*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 0.02% 0.69% 0.70% 0.99% 1.13%
FYTD  0.10% 5.59% 10.77% 16.38% 22.73%
1 Year 0.10% 6.12% 12.02% 28.26% 25.42%
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) 8.07 19.96 161.43 161.43 25.62

*These options commenced on 1 July 2017. 

Fully Retired Option Performance (crediting rate)

 

  Cash Savings Conservative Conservative Growth* Growth High Growth
1 month 0.02% 0.51% 0.80% 1.11% 1.36%
FYTD  0.12% 5.91% 12.03% 18.17% 25.28%
1 Year 0.12% 6.72% 13.43% 20.27% 28.32%
5 Years p.a. 1.42% 5.81% 8.23% 10.24% 12.42%
10 Years p.a. 2.27% 6.64% n/a 10.45% 11.91%
Funds managed ($m) 89.26 591.08 1,692.79 1,133.20 121.43

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

Market overview

Australia welcomed May’s unemployment rate of  5.1%, the same as recorded in February 2020  prior to the economic damage wrought by the COVID-19 pandemic. The rapid decline in unemployment is a measure of an economic recovery that has exceeded expectations. Australia’s GDP also reached pre-pandemic levels in Q1 2021. At the depths of the crisis in 2020, the return to pre-pandemic levels of economic activity wasn’t expected to happen until the end of 2021. 

Nonetheless, it will most likely take until the second half of 2022 for output to catch up to where it would have been had the pandemic never happened. The slow rollout of vaccines in Australia has presented a risk to the full normalisation of economic activity, and poses an ongoing risk given the potential for outbreaks of the virus – as recent events in Melbourne and Sydney have highlighted. 

The Reserve Bank of Australia left its cash rate and three-year government bond target intact at 0.10% at its June policy meeting. The bank emphasised that, despite a strong recovery in economic activity, "inflation pressures remain subdued in most parts of the Australian economy." It said it expected a pick-up in inflation and wage growth "to be only gradual and modest”.

The RBA has also set up its July meeting for some important announcements on its yield curve control and quantitative easing (QE) programmes. The QE programme, which involves the RBA buying longer-term government bonds, is likely to be scaled back from the current pace of $100bn over six months. Gradually the RBA is moving away from some of the emergency settings that were put in place at the height of the pandemic, but monetary policy is likely to remain stimulatory for an extended period.

The U.S. economy’s rebound from the pandemic is driving the biggest surge in inflation in nearly 13 years (since the 2008 GFC). The annual inflation rate in the US accelerated to 5% in May 2021 from 4.2% in April and is above market forecasts for the second month in a row. The Federal Reserve, which targets inflation of 2%, remains adamant that this is a ‘transitory’ lift in inflation brought about by the effects of the pandemic, and as such does not warrant any imminent tightening in monetary policy, including interest rate rises. 

Despite an encouraging May in the UK, a concerning rise in COVID-19 cases (specifically the Delta variant) has caused the June 21 date to ease final restrictions to be postponed for another month. Still, over 60% of the population has received at least one vaccination and case numbers remain low relative to previous waves.

Eurozone shares posted another advance in May (supported by a strong corporate earnings season), and generally outperformed other regions. This coincided with an acceleration in the vaccine rollout, which had initially lagged in the US and the UK. Most of the major European economies are now sitting around 50% vaccination rates. 

Japan’s markets remained optimistic amid the worsening coronavirus crisis, as the country kicked off a mass vaccination program in preparation for the July Olympics (as of late June, around 20% of the population have received at least on dose). A recent surge in COVID cases, peaking in May, has also seemingly been brought under control by tighter restrictions on activity.

India’s surge in virus transmission has also eased in recent weeks, with new daily recorded cases falling from 400,000 to under 100,000. Although the recent crisis there had only a limited impact on financial markets, it highlights the risk that the virus still poses in many emerging market economies which have not had the same access to vaccines as their developed-world counterparts.

 

Sources: FactSet, Frontier Advisors, Citigroup and JP Morgan. The investment market returns represented above are not Cbus asset class returns. They are returns for each market as measured by standard market indices. More information on these market indices can be found in the Glossary. For unhedged international shares and market shares, when the Australian dollar falls against currencies in major share markets, and there is no currency hedging, international market returns in Australian dollar terms are higher.

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 31/5/2021 Growth (Cbus MySuper)
Australian shares 22.72%
Global market shares 27.10%
Emerging market shares 6.69%
Private equity 2.64%
Alternative growth 1.49%
Infrastructure 10.83%
Property 10.56%
Mid-risk alternatives 6.16%
Fixed interest 6.84%
Cash 4.98%
Growth / Defensive allocation split 74.40% / 25.60%

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.