Market summary - 31 March 2010 quarter

The quarter to 31 March saw fluctuating investment markets with minor gains in some sectors offset by small declines in others.

While no one expected a quick and painless return to pre-October 2007 investment returns, the second half of 2009 offered some hope that steady growth might continue into the New Year. A few months into 2010, we can see that markets have not continued a smooth and upward path, but flattened and paused a little.

The performance of the US S&P500 in January is viewed by some in the market as setting the tone for the rest of the year. If this holds true, 2010 could be a year of minor decline - between Wall Street's opening on 4 January and its close on 29 January, the Dow Jones lost 3.48%.

The same month saw the Australian share market fall by 6.2% (S&P ASX 300), its worst single-month fall since the more turbulent days of November 2008. January's declines may not need to be cause for panic however, with commentators generally seeing this as a mild correction on the strong growth in late 2009, rather than a new bear market.

March saw mixed performance for growth assets, with positive returns from Australian shares and International shares (unhedged to $A). The Australian share market improved on February's performance with the S&P ASX300 posting a 5.7% in March, following a 2.00% return in February.

The market movements

  • The Australian stock market returned 1.3% (S&P/ASX300 Accumulation Index) over the March quarter. It was a mixed result across the 12 ASX sectors with a third posting negative results. Telcos produced the largest negative result returning -8.9% followed by Property Trusts with -1.6%. The sectors that contributed positively were Information Technology up 6.3%, Healthcare up 4.4% and Financial (ex LPT's) up 3.2%. Overall the S&P/ASX 300 recorded a 27.3% return for the financial year to date.
  • International stock markets returned 1.1% (MSCI World Ex Australia in $A (unhedged)) and 4.8% on a fully hedged basis. The US stock market posted strong returns of 4.9% for the S&P500 and 4.1% for the Dow Jones index. An improving European economic environment also produced returns of 4.9% for the UK's FTSE, 1.0% for the French CAC and 3.3% for the German DAX. Emerging markets posted mixed returns with the stand out market being India- the BSE 200 index posted 0.9% for the quarter and a 92.9% return for the financial year to date.
  • Fixed interest markets continued to post positive returns over the March quarter as improving credit conditions resulted in returns of 1.3% for the UBS Australian Composite Bond Index and 2.7% for global fixed interest via the Barclays Capital Based Aggregate Index (hedged to $A).
  • The UBS Warburg Australia Bank Bill Index posted a 1.0% return over the March quarter.

Telstra Super's performance

Accumulation investment returns to 31 March 2010*

3
months

12
months

3
years

5
years

7
years

10
years

 Since inception
Growth 1.85% 30.89% -2.50% 5.81% 8.99% 5.61% 7.15%
Balanced 1.73% 24.09% -0.44% 6.30% 8.71% 6.12% 7.28%
Conservative 1.50% 12.26% 2.41% 5.49% 6.56% 5.55% 5.70%
Australian Shares 1.58% 38.91% -0.41% 9.09% 7.98% - 9.68%
International Shares 2.34% 28.08% -3.61% 4.31% 13.53% - 1.89%
Property 1.14% 40.09% -14.36% -1.29% - - 2.41%
Fixed Interest 1.46% 6.35% 3.73% 4.25% - - 4.33%
Cash 0.87% 2.96% 4.65% 4.84% 4.78% 4.66% 4.59%

* These returns do not apply to Telstra Super RetireAccess members. Further details. Past performance is not a reliable indicator of future performance.

Telstra Super RetireAccess investment returns to 31 March 2010*

3
months

12
months

3
years

5
years

7 
years

10
years

 Since inception
Growth 2.20% 37.73% -2.64% 6.42% 10.14% 6.23% 7.01%
Balanced 2.02% 28.83% -0.47% 6.97% 9.82% 6.87% 7.36%
Conservative 1.80% 14.43% 2.61% 6.19% 7.48% 6.35% 6.54%
Australian Shares 1.92% 46.72% -0.19% 10.11% 15.09% - 10.65%
International Shares 2.72% 34.44% -3.98% 4.65% 9.09% - 1.91%
Property 1.49% 57.27% -16.25% -1.67% - - 2.57%
Fixed Interest 1.72% 7.56% 4.45% 5.04% - - 5.12%
Cash 1.02% 3.49% 5.45% 5.68% 5.61% 5.47% 5.42%

* These returns do not apply to Accumulation members. Further details. Past performance is not a reliable indicator of future performance.

 

Strong economy continues to impress

In contrast to the relatively flat investment markets, the Australian economy continues its impressive performance. In early March, the Federal Government released the National Accounts figures for the December 2009 quarter. These showed that the economy grew by 0.9% during that period. For the full 2009 calendar year, Gross Domestic Product was up by 2.7%. Announcing the figures, Treasurer Wayne Swan said, "Growth in the Australian economy in the calendar year 2009 was stronger than any other advanced economy". Mr Swan also said that the year ahead showed positive signs: "The economy has proved remarkably resilient, with the strong outcomes to date providing a solid base for a broadening recovery over the coming year".

Job advertisements have continued to increase as the economy recovers, with a 1.8% increase in March following a 19.1% increase the previous month. The unemployment rate is set to ease throughout the rest of this year, remaining steady at 5.3%[1].

 

A return to positive performances

With the financial year coming in to its final few months, attention naturally turns to what the year-end investment returns might be. After two years of negative returns across both of Telstra Super's default options (Balanced and Conservative), this financial year has shown stronger gains. Between 1 July 2009 and 31 March 2010, the Balanced option has returned 15.39% and the Conservative option returned 8.67%.

[1] Media release 6 April 2010, 'Job ads up 1.8% in March, Turnbull to quit politics: Economy Roundup'.