By Mark Rider, Chief Investment Officer, LGIAsuper
12 May 2022
If the first quarter of 2022 has shown us anything, it is clear this year will be more challenging than the last several years for superannuation.
I recommend that members who are concerned about the impact of market volatility on their super should book a Super Health Check with one of our superannuation specialists. For members considering their investment options, I also strongly recommend seeking financial advice before making any decisions. Our members can receive limited advice on a single topic related to superannuation, such as choosing an investment option, at no additional cost.
What is happening in the market?
While higher inflation rates were previously seen as a temporary response to supply chain issues caused by COVID-19, it has become clear that this is a more enduring trend.
This is driven by strong demand on the back of government COVID-related support measures, low unemployment rates and rising wage pressures, and exacerbated by Russia’s invasion of Ukraine and the boom in oil and gas prices this has caused.
Interest rates around the world have increased as inflation is now expected to remain higher for a longer period. This has led to negative returns in global share and fixed income markets to date in 2022. What is interesting, however, is that Australian equities have been more resilient and performed better than most other major share markets.
Through these volatile times, the fund and our investment managers have continued to monitor the situation in Russian markets to ensure we make any decision regarding our holdings in our members’ best financial interest. We are committed to integrating ESG (Environmental, Social and Governance) principles into our investment decisions. For further information, refer to our recent update on Russian securities holdings.
How is this affecting my superannuation?
The widespread nature of weaker returns across asset classes in Australia and abroad is impacting both our growth and defensive portfolios.
While this may be concerning, members are reminded that returns have been very strong for Australians who have invested in their super over the past decade.
For example, the MySuper option, LGIAsuper’s Diversified Growth and Energy Super’s Balanced option (for Accumulation accounts) all averaged around 8% per annum return over a 10-year period as at 30 March 2022.
A period of weaker returns is not unexpected after such a strong run of robust returns.
Acquisition of Suncorp Superannuation Services Limited
In April 2022, the fund completed its acquisition of retail fund Suncorp Portfolio Services Limited (SPSL) to deliver medium-term benefits to members.
In the future, SPSL will be merged into the LGIAsuper and Energy Super fund to create one sustainable $31 billion fund. This will mutualise the fund and place the ownership of the fund in the hands of all the members, in the same way that LGIAsuper and Energy Super operate. Once this is completed, we will have greater scale, increased range of investment opportunities, and enhanced products and services.
What is LGIAsuper doing to protect my investments?
We are protecting our members by building a diversified investment portfolio, spreading our members’ money across a range of shares, property, infrastructure, debt, and other growth assets.
Our highly skilled investment managers are continuing to closely monitor the performance of our investments, the market, and macroeconomic conditions to maximise returns for our members while delivering investment security.
As we saw with COVID-19, volatility brings challenges and opportunities, both of which our team is well-equipped to respond to and protect the interests of our members.
What should I do to protect my investments?
Before making decisions regarding your financial future, we recommend that you seek personalised financial advice from one of our experts.
Our financial advisers were recently acknowledged by research company Chant West, which shortlisted LGIAsuper for the 2022 Best Fund: Advice Services award. The accolade recognised our fund as a leader in providing advice services that are relevant and accessible for all members.
You can book a 30 minute Super Health Check at no additional cost with one of our superannuation specialists, or arrange an appointment with one of our financial advisers by calling us on 1800 444 396.
You can view previous market update editions in our library.
ESI Financial Services Pty Ltd (ESI Financial Services, ABN 93 101 428 782) (AFSL 224952) is a wholly owned entity of LGIAsuper. ESI Financial Services has engaged Industry Fund Services Limited (IFS) ABN 54 007 016 195 AFSL No 232514 to facilitate the provision of financial advice to members of LGIAsuper. LGIAsuper Financial Advisers are Authorised Representatives of IFS. In limited circumstances, a LGIAsuper Financial Adviser may also be an Authorised Representative of ESI Financial Services.
Additionally, LGIAsuper has also engaged Link Advice Pty Limited ABN 36 105 811 336, AFSL 258145 to provide LGIAsuper members with access to limited personal advice over the phone in respect to LGIAsuper and Energy Super products.