Global markets deliver strong returns for pensions

08-Sep-2017

Pension members will be pleased to learn that investment returns for VISSF have been very strong over 2017, with the diversified options benefiting from their exposure to Australian and global shares. For the year ending 30 June, the All Growth option produced a 17.7% return for members, while the Balanced and Conservative options delivered 13.4% and 7.2% respectively.

The financial year began with investors finding their feet in a post-Brexit environment. This affected investments in the short-term but soon saw stocks gain momentum as the decision was found to have little impact on the global economy. Markets also made good gains during the financial year amid evidence surfacing of an increasingly stabilised Chinese economy. Adding to the favourable market conditions were encouraging US and European earnings results and Emmanuel Macron’s convincing win over Marine Le Pen in France’s presidential election.

VISSF continues to meet investment objectives and maximise returns relative to inflation, as measured by the Consumer Price Index (CPI), with our diversified Pension options outperforming their CPI relative investment objectives across almost all periods to 30 June 2017.

See the table below for investment return details.

Year ended 30 June 2017 3 year compound 5 year compound 7 year compound 10 year compound [1]
One year % average % p.a. average % p.a. average % p.a. average % p.a.
All Growth 17.7 9.9 14.9 11.5 4.5
Objective (CPI + 3.5%) 5.4 5.0 5.5 5.6 5.6
Outperformance 12.3 4.9 9.4 5.9 -1.1
Balanced 13.4 8.6 12.4 10.3 5.5
Objective (CPI + 3.0%) 4.9 4.5 5.0 5.1 5.1
Outperformance 8.5 4.1 7.4 5.2 0.4
Conservative 7.2 6.2 8.1 7.8 6.4
Objective (CPI + 1.5%) 3.4 3.0 3.5 3.6 3.6
Outperformance 3.8 3.2 4.6 4.2 2.8
Cash 1.6 2.0 2.3 2.9 3.2
Objective (Bloomberg AusBond Index[2]) 1.6 2.0 2.3 3.0 3.7
Outperformance 0.0 0.0 0.0 -0.1 -0.5
Inflation CPI 1.9 1.5 2.0 2.1 2.4

[1] The effect of the global financial crisis (GFC) in 2008/09 can still be seen in the 10 year compound returns. This highlights the extreme nature of the GFC.

[2] The Bloomberg Aus Bond Bank Bill Index returns are net of fees.

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