Despite the uncertainty of 2021, the last 12 months have seen a share market boom. This is reflected in strong investment returns, which have helped push up super balances.
Our two lifecycle options have delivered solid returns for the previous quarter (to 31 December 2021). Growth Plus is up by 2.8% and Balanced Growth by 2.2%. That takes one year returns to 14.6% and 12%, respectively.
But the highlight has been our Property option, which returned 7.1% for the quarter, and 17.1% for the previous 12 months. That’s a $17,000 return on a $100,000 super balance*.
Overall, markets have rebounded sharply since COVID caused a plunge in early 2020. The Australian ASX is up over 50% in the previous 18 months. This sharp jump has made up for any initial losses and then some. It’s been fueled by successive rounds of fiscal stimulus and very low interest rates, which have enabled investors to look beyond the rolling lockdowns, supply shortages, and travel restrictions.
Where to from here?
Will the strong investment returns continue? The slowdown of financial markets at the start of the year and growing alarm about inflation suggests the gains may have already been made.
Following the initial COVID panic in March 2020 the playbook for global markets has been relatively straightforward. Very low interest rates + fiscal stimulus = stock market gains.
In other words, the global economy has been awash with cheap money as governments have attempted to contain the greatest economic contraction we’ve seen since the Great Depression.
But two years on, the picture has changed. Vaccines have enabled a partial reopening and people have started to spend some of the money they squirrelled away during the height of the pandemic.
This has been tempered by supply chain problems, volatile employment markets, and a business sector that’s hesitant to invest while things remain up in the air.
Meanwhile, inflation has been creeping up, fueled by all that cheap money. In the U.S. this has seen inflation numbers hit their highest rate since 1981 and the Reagan presidency.
The challenge for governments over the next 12 months will be navigating the global uncertainty while trying to balance growth and spending. That’s a tall order, and its success will be reflected in share prices.
Meanwhile, there’s the small matter of a federal election here in Australia.
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Authorised by Togethr Trustees Pty Ltd (ABN 64 006 964 049; AFSL 246383) ('Trustee') the trustee of the Equipsuper Superannuation Fund (ABN 33 813 823 017). Catholic Super is a division of the Equipsuper Superannuation Fund (ABN 33 813 823 017). Financial advice services may be provided to members by the trustee's related entity.
Togethr Financial Planning Pty Ltd (ABN 84 124 491 078; AFSL 455010). The information contained herein is general information only. It has been prepared without taking into account your personal investment objectives, financial situation, or needs. It is not intended to be, and should not be, construed in any way as investment, legal or financial advice. Please consider your personal position, objectives, and requirements before taking any action. Past performance is not a reliable indicator of future performance.
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