Monthly highlights

  • The Growth (Cbus MySuper) option returned 0.84% for the month of October and 18.16% for the 12 months ending 31 October 2021.
  • Australian and Global shares* delivered a return of 0.10% and 2.70% (hedged) respectively for the month of October 2021.
  • The Reserve Bank of Australia left the cash rate unchanged at 0.10% in its meeting on 5 October.  

*ASX 300 Accumulation Index and MSCI ACWI ex Aust Net Divs Custom Tax Hedged to AUD.

Super Investment Option Performance (crediting rate)

 

  Cash Savings Conservative Conservative Growth* Growth (Cbus MySuper) High Growth
1 month 0.00% -0.25% 0.34% 0.84% 1.39%
FYTD  0.05% 0.47% 1.28% 2.20% 2.91%
1 Year 0.14% 5.74% 11.51% 18.16% 24.35%
5 Years p.a. 1.02% 5.17% n/a 9.66% 11.97%
10 Years p.a. 1.70% 5.92% n/a 10.00% 11.73%
Funds managed ($m) 935.15 1,050.17 787.23 55,822.14 4,478.40

*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 0.00% -0.25% 0.34% 0.85% 1.39%
FYTD  0.05% 0.47% 1.28% 2.19% 2.90%
1 Year 0.14% 5.76% 11.53% 17.81% 24.41%
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) 8.34 16.02 150.69 152.51 23.95

*These options commenced on 1 July 2017. 

Fully Retired Option Performance (crediting rate)

 

  Cash Savings Conservative Conservative Growth* Growth High Growth
1 month 0.00% -0.31% 0.37% 0.95% 1.54%
FYTD  0.06% 0.53% 1.50% 2.58% 3.46%
1 Year 0.16% 6.07% 12.88% 19.87% 27.30%
5 Years p.a. 1.28% 5.80% 8.47% 10.77% 13.31%
10 Years p.a. 2.08% 6.69% n/a 11.18% 13.09%
Funds managed ($m) 88.50 589.78 1,850.90 1,279.34 144.76

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

Market overview

Current as at 17 November 2021

Global Share Markets

The investment environment remains constructive, with developed share markets continuing to push higher in recent weeks. Markets in the US and Europe have led the way and are sitting around record highs. Developed share market continue to outperform emerging markets. The earnings season is drawing to a close, with strong results exceeding expectations once again in the US and Europe. While returns were understandably smaller than in the previous “covid-recovery” quarters, this is a promising sign that earnings and markets are starting to rebalance to their pre-covid levels. 

Central Banks

Bond yields over the month in key economies are stable to lower, but this masks some very sharp rises during the final week of October. These moves were concentrated at the shorter end of the yield curve (generally 2-5 years) as markets priced in an increasing amount of central bank tightening in 2022. This was especially the case in Australia, where the Q3 CPI data was stronger than expected and the trimmed mean measure of underlying inflation rose to 2.1% year-on-year – the first reading within the RBA’s 2-3% target band since 2015. At its November meeting, the RBA confirmed that it was ending its yield curve control target (which had sought to maintain a yield of 0.1% on the April 2024 bond). It also acknowledged that there had been a shift in the distribution of possible outcomes for the cash rate (which has sat at the historical low of 0.01% for quite some months), with an earlier ‘lift-off’ also a possibility versus the previous expectation of raising in 2024. However, at the meeting and in subsequent communications, the RBA has pushed back on market pricing for rate hikes in 2022, based on forecasts for only a gradual acceleration in wage growth. Nonetheless, markets continue to price in multiple RBA rate hikes in 2022, even more than are priced for the US Federal Reserve.

The pricing of interest rate expectations in the US, especially relative to other countries, appears inconsistent with the materially higher inflation data of recent months. In October, US CPI inflation hit 6.2% year-on-year, while the ‘trimmed mean’ measure of underlying inflation rose to 4.1%. Both were multi-decade highs. It remains the case that high inflation is being driven largely by goods prices as consumer demand remains very strong and supply chains are struggling to keep up. However, as the elevated trimmed mean suggests, inflation pressures appear to be broadening beyond just consumer goods. Increases in housing rents (which make up around a third of the total CPI basket) have accelerated over the past few months. In addition, wage growth remains well above pre-pandemic levels in the US, which will likely be a source of upward pressure on services prices. This is likely to be exacerbated by the reopening effect, as certain industries scramble to rehire workers in a short space of time. 

The unemployment rate in the US continues to decline – down to 4.6% in October – suggesting that the labour market is tightening. However, there is a large pool of workers who left the labour force during the pandemic and who are yet to return. How quickly these workers return will be a major driver of the outlook for the US labour market. The current view of the Federal Reserve is that many of these workers will return over the next year, suggesting that the labour market may not be quite as tight as most indicators suggest.

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 31/10/2021 Growth (Cbus MySuper)
Australian shares 22.99%
Global shares 25.89%
Emerging market shares 5.29%
Private equity 2.38%
Alternative growth 2.09%
Infrastructure 11.21%
Property 11.12%
Global Credit 7.06%
Fixed interest 6.33%
Cash 5.58%
Growth / Defensive allocation split 73.37% / 26.62%

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.