Growth returning to world markets
The quarter ended 30 September 2017 was thankfully one free of major market shocks or surprises.
There is more and more evidence that the world is returning to a coordinated journey of growth – perhaps the strongest trend of growth seen since the global financial crisis. Up until recently, the United States had been making the biggest contribution to global economic growth, but Europe, Japan and emerging markets are also now starting to perform more strongly and to contribute to the overall growth picture.
Continued strong returns for REI Super members
In keeping with the more settled markets, REI Super’s returns to members for the quarter continued to be strong.
Over the past five years our Balanced option has provided an average annual net return to members of 9.47%, which has enabled significant growth in our members’ retirement savings.
Of course we are still seeing political risks to markets in certain parts of the world. Some examples of these are the tensions on the Korean peninsula and the Catalonian issue in Europe. These might provide short term shocks.
As a result of growth in Europe, Japan and emerging markets it was a particularly strong quarter for international shares. Australian shares were flat for the quarter, despite an eventful reporting season for many companies.
Among the performance figures, Australian listed property (AREITs) had its first positive quarter in the last 12 months.
Although world growth appears to be coming through from several sources, the current valuations of some assets such as US and Australian shares and listed property still appear fully priced. This means there are still some risks, and we need to continue to apply active management in the selection of suitable investments.
Investment outlook
We’re cautiously optimistic about the current investment outlook. In the last financial year our Balanced option provided net investment returns to members in the high single digits, and at this point we’re expecting similar levels of returns for this financial year.
As always, of course, we remain alert to both the opportunities and risks to the portfolio. While investing in well-priced assets, we continue to diversify our investments and to guard our members’ savings from market shocks wherever possible.
Go to the investment performance section of our website to see investment returns of all of REI Super’s investment options.
Note: Past returns are no guarantee of future performance, and investment returns of less than one year should not be relied upon as any guide to future performance.