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The importance of staying the course when it comes to super
Watch the below video for an investment update with Chief Investment Officer Seamus Collins, who looks back at the extraordinary periods in markets over the past few years, and the importance of viewing your super as a long-term investment.
We’ve seen significant falls in global investment markets since the start of the calendar year. This downturn has led to a challenging year for investors, and over the 2021-22 financial year, the average growth fund returned -3.3%*; the first negative return in recent years.
What this means to Mine Super members
Mine Super members aged 50 and under who are invested in our Lifecycle Investment Strategy^ saw an annual return of -6.03% for the year ending 30 June 2022. However, long-term performance for the High Growth option is positive, with an annual return of 8.68% over the last 10 years to 30 June 2022 – beating its investment objective (which is to achieve a return exceeding the increase in the Consumer Price Index (CPI) by at least 4% pa, after tax and investment costs, over any 10 year period).
According to our Chief Investment Officer, Seamus Collins, this year is only the 5th time in 16 years where the High Growth option has experienced a negative return. “Based on the High Growth’s Standard Risk Measure# the estimated number of annual negative returns over any 20 year period is between four and six years. Over the last 16 years (which is as long as this option has been available), we’ve had five annual negative returns, which is more or less as expected. Two of these were during the global financial crisis (GFC) of 2007-2009, followed by a small negative return in 2020 due to the impact of COVID-19 on investment markets,” Seamus commented.
Long term returns remain positive - what this means for a typical member
The below graph outlines how a starting balance of $100,000 in 2006 has grown over the last 16 years, if it was invested in the High Growth or the Conservative Balanced option (these two options have made up Mine Super’s Lifecycle Investment Strategy since March 2021). It does not take into consideration any contributions, fixed administration fees or insurance premiums.
You see, despite a few dips along the way, a starting balance of $100,000 in 2006 would be worth more than $250,705 (for the High Growth option) or $219,242 (for the Conservative Balanced option) on 30 June 2022. That’s not even taking into consideration any contributions added during this period, which would have benefited from the same compound earnings growth!
To view the investment performance of these, and our other investment options, head to the Investment performance page.
Mine Super's response
As market volatility is a normal part of investing, Mine Super’s investment team are experienced and prepared for dealing with market downturns. “Our investment portfolio is structured to invest in long-term stable assets such as property and infrastructure that reduce volatility from listed markets, and allocations to defensive assets like fixed income and cash also reduce the impact of equity market losses,” said Seamus.
Looking ahead
According to Seamus, economic headwinds remain as we look ahead. “Primarily the increasing levels of price inflation and the impact this has on the broader economy as goods and services become more expensive. Despite this, at present employment remains strong both here and overseas and this provides some cause for optimism that a recession, although a possibility, might be avoided. Central banks have reacted strongly to the threat of inflation by increasing interest rates to cool the economy and stabilise consumer demand. These actions, it is hoped, will enable the economy to reset by early 2023 and continue to grow,” commented Seamus.
Turn to Mine
It’s a good idea to review your super from time to time to see if you’re still happy with the investment option/s in which you’re invested, especially when you approach retirement.
If you’re a member, you can call us for an account health check, including advice from Mine Super Financial Advice about how your account is invested, at no extra cost. For more complex advice, you can request an appointment online. And did you know? Members are entitled to a complimentary initial appointment.
* Source: Chant West, Super Members Spared the Worst in a Rough Year for Markets, 19 July 2022
^The Lifecycle Investment Strategy invests in a mix of the High Growth and Conservative Balanced investment options based on your age. Members aged 50 and under will be 100% invested in the High Growth investment option. Members aged 51 and 64 will be invested in a mix of the High Growth and Conservative Balanced investment options based on their age, while members aged 65 and over will be 100% invested in the Conservative Balanced investment option.
# For more information about the Standard Risk Measure, go to the Investment Options page.
Past investment performance isn’t necessarily an indication of future performance.