Investment update

posted on 27.02.2017

Trump’s election provided a sugar hit to share markets

Investment markets were surprisingly supportive during the quarter and shares performed well.  Australian shares had good returns and our Japanese shares portfolio again performed particularly strongly. 

With a return of 1.22% for the quarter, REI Super’s Balanced option delivered a net investment return of 7.69% for the full calendar year.

The Fund is also continuing to deliver strong long term returns, with an average annual return of 7.89% over the last three years and 10.32% per annum over the last five years.

These are excellent long-term returns for REI Super members and exceed the returns of the median super fund balanced option.

Click here for a full table of investment returns for all our investment options. 

In the lead-up to the US election we were holding a higher than usual allocation of cash, which we more recently put to good use in the bond market, where bonds have recently become better value.  

Bond markets showed a lot of volatility during the quarter.  The threat of future inflation, based on the new Trump administration’s possible spending policies led to an increase in some interest rates. This in turn caused the value of many fixed interest portfolios to fall. 

During the quarter we also continued to reduce our weighting to Australian listed property, and this decision was well timed in light of that sector’s recent poor performance. 

The outlook and our strategy

While Trump’s election provided something of a ‘sugar hit’ to the US share markets, we need to be wary of these types of short-term market responses, as they can often distract from companies’ actual performances.  

Equities have become more expensive and more unpredictable in the last 12 months, which is undoubtedly a reflection of the recent political upheavals in the US and Europe. 

Our outlook is for more volatility in the share markets and potentially higher inflation around the world. 

At REI Super we’re less focused on short-term asset price variations and more focused on the longer term fundamental characteristics of different assets which make them a good proposition to deliver healthy long-term investment returns. 

This disciplined approach is the best way to generate long-term returns for our members. 

Note: Past returns are no guarantee of future performance, and investment returns of less than one year should not be relied upon as any guide to future performance.

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