Investment update to 31 December 2024

31 January 2025

December 2024 saw global share markets down slightly from the previous month. Brighter Super’s diversified portfolio proved resilient, continuing to deliver competitive returns for members.

Examples of returns for 1 year ended 31 December 2024 include¹:

• Accumulation accounts: Growth returned 13.97%, Balanced returned 12.08% and MySuper returned 11.60%.
• Pension accounts: Growth returned 15.50%, Balanced returned 13.30% and Conservative Balance returned 10.65%.

Below are the returns for Brighter Super’s diversified investment options for periods ended
31 December 2024.

High SuperRatings rankings

Brighter Super’s Growth and Balanced options achieved high rankings over 5- and 7-year periods in SuperRatings’ December 2024 Fund Crediting Rate Survey, which is used to benchmark top-performing options across the Australian superannuation industry².

Over the shorter term, our default MySuper delivered above median returns in the SR50 MySuper Index for 1 year (ranked 12th) and top quartile returns for 3 years (ranked 4th) ended 31 December 2024.

Market summary

Share markets were broadly weaker during December 2024, with both Australian and Overseas Developed Market (Hedged) equities providing negative returns.

The US Federal Reserve reduced interest rates by 0.25%. However, the cautious tone in the Federal Reserve’s outlook statement weakened investor sentiment, raising concerns that future rate cuts might be smaller than expected.

US shares underperformed broader Developed Markets over the month, with the S&P 500 returning -2.4%. Returns over the previous 12 months have, however, been quite strong, and reflect ongoing strength in the US economy. Employment data is also resilient.

In Asia, Chinese shares bucked the broader share market trend, returning 2.8% in local currency. Japanese equities were also stronger, returning 4.3%. The weakness of the Japanese yen may have improved the earnings outlook for export-driven Japanese companies.

The MSCI Europe Index followed broader equity market sentiment during December 2024, returning -0.5% over the month. The economy continues to appear soft in Europe, with indications of ongoing weakness in the manufacturing sector. The European Central Bank announced its fourth rate cut of 2024 in December, and expectations for the inflation outlook were reduced along with confirmation that the disinflation (slowing down of inflation) is well on track.

Australian shares underperformed Developed Market equities, returning -3.1% over December 2024. Listed Property was much weaker, returning -5.8%. The Financials and Materials sectors were both also more than 4% weaker over the month. At its December meeting, the Reserve Bank of Australia (RBA), maintained the cash rate at 4.35%. The RBA noted that whilst inflation remains too high, it does have increasing confidence that inflation is moving sustainably toward target.

Overseas bonds were marginally weaker in December 2024, returning -0.9%. Ongoing strength in US economic data may have been a driver for slightly higher US bond yields. Australian bonds were marginally stronger, returning 0.5%.  The Australian 10-year government bond yield rose 0.03% to end December at 4.37%, whilst the US 10 year yield rose more materially; by 0.40% to 4.57%.

Most major currencies were weaker relative to the US Dollar (USD), though the underperformance of the Australian dollar (AUD) relative to the USD was pronounced, returning -5.0% over the month. The AUD has now fallen -10.8% over the previous quarter. Economic strength in the USA relative to Australia is a likely driver, along with potential weakness in the Chinese economy and expected rate cuts by the RBA over 2025.