Hello again, I’m Graeme Miller, Chief Investment Officer at TelstraSuper.  

In this video, I’ll update you on the performance of TelstraSuper’s investment options in the first three months of 2024.  

I’ll also talk about the outlook for the remainder of the year and how our investment portfolios are currently positioned.

[DISPLAY QUARTERLY ACCUMULATION RETURN SLIDE ON SCREEN]

The chart on the screen shows the performance of TelstraSuper’s investment options for our accumulation members for the three months to 31 March 2023.  You can see that it was a strong quarter of performance for all our diversified investment options.   

For our diversified investment options, the returns ranged from 2.16% for the Conservative option to 6.99% for the High Growth investment option and 5.88% for the Growth investment option.   For the single sector options, you can see that our International Shares option performed strongly, delivering a return of 12.27% for the quarter.   It was a more subdued quarter for the Property and Diversified Bonds and Credit options, which earned around 0% and 0.8% respectively for the quarter.

These returns are net of all investment taxes and investment fees, but before the deduction of any applicable percentage-based administration fee, member fee or rebate.  

[DISPLAY QUARTERLY PENSION RETURN SLIDE ON SCREEN]

And this slide shows the returns for RetireAccess pension members.  You’ll see they’re similar to the returns for our accumulation members.   The Lifestyle Growth Investment Option earned 5.6%, the Lifestyle Balanced option achieved 4.7%, the Lifestyle Moderate option earned 3.6% and the Lifestyle Conservative option earned 2%.  

So, it was another strong quarter overall, and as you saw from the slides, our returns for the financial year to date are positive for all of our diversified investment options.

The reason behind the strong returns during the quarter has been the performance of international shares.   Investor sentiment in the quarter was buoyed by optimism about Artificial Intelligence and the prospect of inflation and interest rates easing.   This optimism lifted share markets to all-time highs in a number of advanced economies, including Australia and the United States.  Unsurprisingly, shares in technology companies linked to Artificial Intelligence have been amongst the top performers over the quarter.

You may recall that at the start of the financial year, investors were cautious about the outlook for economic growth, and feared that a recession may be around the corner as higher interest rates started to bite.   In fact, recent economic growth and employment levels have turned out to be stronger than many investors thought they’d be, and investment market pricing now suggests that we may be able to avoid a recession, which has led to the general strength of investment markets.

The Australian share market, which does not have big exposure to technology companies, lagged its global peers, but the ASX300 share market index still delivered a return of 5.4% for the quarter.

Turning now to TelstraSuper’s portfolios, like many investors, our Investment Strategy Team believes that the chance of a recession in 2024 has decreased, although we can’t rule out the possibility of economic growth slowing for the remainder of the year.   Given this view, we have recently made some adjustments to investment exposures in our diversified investment options.

Specifically, we have increased our exposures to Australian shares back to the long term strategic levels and we have also increased our exposure to International Shares to moderately above their long term strategic levels.   We have also reduced exposure to fixed interest securities, although we remain slightly overweight in this asset class, and we have reduced our exposure to foreign currency – the Japanese Yen in particular.   Overall, our portfolios are now close to their long term strategic allocations.

As we manage your investments, we are monitoring four key things:

Firstly, we’re carefully watching what happens to inflation – because inflation outcomes will give us the best clue as to how interest rates are likely to move for the remainder of 2024.   If inflation continues to moderate, then it’s likely that central banks will reduce interest rates later this year.  But any hint that inflation may be picking up may lead central banks to be more cautious and keep rates on hold, or even increase them.

We’re also keeping a close eye on economic growth, both in Australia as well as overseas.  We’ll be looking to see if consumer spending declines, as higher interest rates and other cost of living pressures begin to bite.  

The current conflicts in the Middle East and Ukraine are also high on our watch list.  While these conflicts have not had a major impact on investment markets, if either of them escalates, this could lead to a downturn in investor sentiment.   On the other hand, a resolution of these conflicts may see markets rise. 
And finally, we’re monitoring political developments across the world – especially the US Presidential election, which we now know will be a re-run of the 2020 election between Joe Biden and Donald Trump. 

As always, our team of investment professionals will continue to manage our portfolios actively, remaining alert to both opportunities and risks in markets.

I once again thank you for entrusting us with the management of your super savings, and look forward to reporting on our performance for the full financial year in July.

Please remember past performance is not a reliable indicator of future performance. 

This presentation contains factual information and general advice only, including information about financial products. It has been prepared without taking into account your objectives, financial situation and needs. You should consider whether it is appropriate having regard to your personal circumstances before making any financial decisions. Before making any investment decision, you should obtain and read the relevant product disclosure statement and relevant target market determinations (TMDs) which are available on the TelstraSuper’s Website or by calling 1300 033 166 between 8.30 am and 5.30 pm (AEST) Monday to Friday. You may wish to consult an adviser before you make any decisions relating to your financial affairs. To speak with an Adviser from TelstraSuper Financial Planning call 1300 033 166.

All returns displayed in this presentation are net of all applicable investment taxes and investment fees, but before the deduction of any applicable percentage-based administration fee, member fee or rebate.