Your super investment update - period to 30 June 2019

posted on 06.08.2019

REI Super members have 10 consecutive years of positive returns

This was the 10th consecutive year of positive returns for REI Super’s Balanced option, which included four years of double-digit returns. The Balanced option achieved a net return, after fees and taxes, of 5.49% for the financial year. The Growth option achieved a 6.19% return.

If we look at the longer term, the Balanced option is outperforming the benchmarks, and its aims, with an average of 7.51% per annum over 5 years, 9.03% per annum over 7 years and 8.61% per annum over 10 years. 

Go to the investment performance section of our website to see investment returns of all of REI Super’s investment options.


Shares ended strongly after a volatile year

Shares were strong performers in the final quarter of the financial year, with both Australian shares and those in developed markets overseas rebounding from the significant decline they had experienced during the second half of 2018. 

Trade tensions between the U.S. and China, the ongoing Brexit uncertainty, and the banking Royal Commission in Australia all had a part in the volatility. There were fears of global growth slowing, however despite these indicators, the last six months of the financial year saw share prices rise.


Bonds continued to perform well

Bonds also performed well due to expectations of continued interest rate cuts, which eventuated across world banks including Australia. We ended the financial year with an interest rate of 1.25%, which was lowered further by the Reserve Bank of Australia in July to 1%, the lowest cash rate in Australia’s history.

The first quarter of 2019 saw an “inversion” of the yield curve for bonds, which means that the longer-term interest rate for bonds is less than the short-term interest rate. This continued in the June quarter.


REI Super’s investment strategies

REI Super’s portfolios benefited from outstanding returns from international share managers, both developed and emerging markets. The fall of the Australian dollar against the U.S. Dollar helped to boost the unhedged returns from the global investment markets. Both unlisted and listed property also delivered exceptional gains, and bond markets ended the year well.

For the past few years the investment market has experienced the unusual condition that both shares and bonds are performing well at the same time. The two asset classes are usually considered to balance each other within an investment portfolio.


Planning for unknown conditions

Indicators show that the true values of some asset classes are significantly below market prices. Managing risk to protect the balances of members, whilst achieving long-term aims, requires assessing the underlying values of investments and making adjustments accordingly. 

For example in the high-performing U.S. share markets, REI invests in companies like healthcare and consumer staples, which will continue to be required by consumers even if a correction occurs.

We maintain a strong exposure to cash and bonds, traditionally defensive investment asset classes. The Fund also invests in infrastructure and listed property, which are tied to Consumer Price Index (CPI) rises and have solid underlying value.


Note: Future investment performance can vary from past performance, and you should not base your decision to invest in REI Super simply on past performance. Past earning rates are not an indicator of future earning rates. The investment returns of REI Super are not guaranteed, and the value of the investment may rise or fall.

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