Monthly highlights

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

*These options commenced on 1 July 2017. 

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

September has a history for being one of the weakest performing months for equity markets, and this year was no different. After continuous months of gains, the US stock market saw the largest decline since the initial Covid-induced fall back in March 2020. Overall, the US S&P500 index fell 4.8% over September. However, following that period of weakness and increased volatility, markets rebounded and heading into late October the S&P500 has set fresh record highs.

Since the onset of Covid, the US Federal Reserve has been buying $120 billion in bonds each month and holding the Federal Funds interest rate near zero. This makes borrowing cheap and keeps money flowing through the economy, supporting demand and speeding up the recovery. The Fed is now moving closer to paring back these asset purchases; a formal announcement of a plan is expected as soon as early November. 

Companies all around the world, but especially in the US, are battling supply chain shortages which are causing operational disruptions; forcing pricing increases for customers. This is causing wide-spread inflationary pressure as supply chain bottlenecks and labour shortages push up prices and restrict the pace of economic growth in some areas.

Despite two of Australia’s largest cities being in tough lockdowns for the duration of September, the outlook remained somewhat optimistic for the Australian share market as the economic implications of the lockdowns are expected to be short-lived, especially with rising vaccination rates. As an example, despite the lock-downs consumer confidence improved modestly in September.

In China economic growth slowed to just 0.2% from Q2 to Q3, curtailed by disruptions due to covid outbreaks and related lockdowns, as well as blackouts and energy shortages. Regulatory uncertainty also remains high, and there are ongoing worries over the fate of Evergrande, the second largest property developer in China, which is facing insolvency.

Emerging market (EM) share markets also declined in September, weighed down by global market concerns as well as the headwind of the expectation of policy withdrawal, China growth concerns and higher energy prices (with some EM economies a net importer). 

Coming out of its summer period, Europe has greatly benefited from the widespread easing of restrictions as most large eurozone countries have now fully vaccinated around 75% of their populations. Forecasts for Q3 GDP growth are around 2.0% when compared to Q2, a strong rate of growth and similar to the previous quarter.

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

• Super options
• Transition to Retirement options
• Fully Retired options

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

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.