Great timing in listed real estate supported our returns this quarter
The quarter to 30 September 2016 was one of continued volatility in share markets, but we had a surprisingly buoyant quarter overall, with our Balanced option returning 2.63% (net of fees and taxes) for the period.
Put into a longer term context:
- In the 12 months to 30 September our Balanced option delivered a net return of 9.43% to members’ accounts, compared to the industry median* of 7.83%.
- Over the 5 years to 30 September it provided an average annual net return of 10.57%, compared to the industry median* of 9.62%.
Click here for a full table of investment returns for all our investment options.
These strong results are testament to our proven investment strategy of:
- Diversifying across a range of different types of assets, countries, industries and currencies;
- Investing less when markets are expensive and investing more when they are cheap;
and
- Identifying investments that offer good value and a good return for their level of risk.
The markets and our portfolio during the quarter
During the quarter our portfolio benefited greatly from our earlier decision to sell a significant amount of our shares in Australian Real Estate Investment Trusts (AREITs). While AREITs had previously been performing very well, they fell by 10% during the quarter.
July was very positive for Australian shares, fixed income and the Australian dollar.
Since the start of the quarter we’ve also seen a renewed confidence in emerging markets assets. With the political uncertainties in Europe and the US, it seems that investors are more interested in what they see as the “surer” growth prospects in emerging markets.
Our Japanese shares portfolio was a standout performer for the quarter. In particular, Japanese financial companies are priced much more cheaply than Australian banks and they performed very well.
Our property strategy
At REI Super our property portfolio includes:
- Australian unlisted commercial property
- Australian listed property (Australian Real Estate Investment Trusts – or ‘AREITs’)
- Global listed REITs
In light of the current high level of mortgage debt and low income growth in Australian households and, as a result, lower levels of discretionary income for people to spend at shopping malls, we’re now focusing more on global than Australian REITs. (The global REITs tend to invest in more office blocks while the Australian REITs portfolios tend to contain more shopping malls).
Please 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.