Chris: As 2018 comes to an end, we’ve put together this quick video to share answers to the some of the questions we were asked by members at our recent roadshow.
Graeme: question 1 – How has the fund gone in 2018?
C: It’s been a big year! We’ve successfully continued our program of transformation which is focused on delivering the best possible outcomes for our membership.
We’ve also maintained our strong position as Australia’s leading corporate super fund and our funds under management are well in excess of $20 billion giving us significant scale.
In the digital space we launched our new format Member Statement, an App, a digital member card, a new real-time account consolidation tool, retirement income projectors and more! All these make it easier for our members to interact with their super.
G: From an investment perspective 2018 is likely to be remembered as the year when volatility returned to investment markets.
The year started off very strongly, but we saw two periods of significant market sell-offs: in February and March, then again in October and November.
This market weakness was driven by concerns about rising inflation and interest rates, as well as a trade war between the United States and China.
Despite this weakness, I’m pleased to report that for the first 11 months of the year, TelstraSuper has delivered moderately positive returns for members in all of our diversified investment options.
This outcome reflects the fact our portfolios are well-diversified across many different investments, countries and fund managers, and we’ve been somewhat defensively positioned.
Chris: Next question - Will TelstraSuper lose members due to the Telstra2022 project?
Telstra’s 2022 strategy won’t directly affect the size of TelstraSuper.
Once you’re a member of TelstraSuper, you can stay a member for life – regardless of where you work.
We find that most of our members choose to stay with us when they leave the Telstra Group, so the changes at Telstra shouldn’t affect the size or scale of our fund.
TelstraSuper is a separate entity from Telstra, and we look after many former employees and their families; in fact the majority of the Fund’s members no longer work for the Telstra Group.
G: What’s the outlook for financial markets?
Looking forward, TelstraSuper believes that the key ingredients for strong economic growth remain in place – i.e. low unemployment, low interest rates, moderate inflation and strong corporate profitability.
These factors should provide support against an escalation of the negative sentiment seen in October/November, although we expect that markets will continue to be volatile and skittish.
The main risks to returns are likely to come from two sources: higher inflation as the economic cycle matures and full employment puts pressure on wage rises, and geopolitical/trade risks.
Chris: What is TelstraSuper doing to reduce fees?
We’ve been looking at a number of ways to further reduce our already low fees – because we know that in super every dollar counts. In April last year, we were able to reduce the percentage-based administration fee for all of our members. It’s now at its lowest level since 2012, despite the significant increases in government regulations and reporting requirements since then.
But we’re not done yet – we constantly seek to reduce our investment costs and continue to monitor our administration fees, so we’ll return to this in 2019.
Graeme: At what age do you recommend people should look to rebalance their super portfolio and move a % to cash?
There isn’t a one size fits all approach when it comes to investing but we do recommend regularly reviewing your investment options to check they’re still suited to your personal objectives.
For example, a 50 year old who plans on working until 70 has a very different objective than a 50 year old aiming to retire in the next few years.
If you’re in the TelstraSuper MySuper option, we’ll automatically move your investment mix when you turn 45 and then 65. We use a higher growth/higher risk investment option for younger members who want to grow their super but have time to wear short-term fluctuations.
On the other hand we use a more conservative option for older members, with the aim of protecting their investment capital leading up to retirement. However it’s still worth checking these options are suitable for you.
Chris: What’s TelstraSuper’s position on the Royal Commission?
The aim of the Royal Commission is to investigate misconduct in the financial services sector and bring to account behaviours which have been deemed unacceptable to prevailing community standards.
We think this was a good thing for our industry and it’s aligned with our core value of putting members first and ahead of the interests of any other party.
TelstraSuper wasn’t requested to appear before the Royal Commission and neither was TelstraSuper Financial Planning.
Graeme: How will the drop in housing prices affect my super?
TelstraSuper’s property investments are generally held in large assets such as shopping centres, office buildings, factories and warehouses. We don’t invest in Australian residential property.
Our property portfolio continues to perform remarkably well and has one of the best long term track records in the superannuation industry.
A slow-down in housing prices isn’t expected to directly impact on the value of the types of property that we own, but it will have an indirect impact on our investments given that housing is major asset owned by many Australians.
If the value of houses goes down, this is likely to dent the confidence of Australian consumers and this can be expected to hurt assets that are impacted by the health of the economy such as Australian shares.
This is one of the reasons we have a diversified portfolio that is spread across many different asset types in multiple countries. This diversification protects our members from being overly exposed to a single market such as housing.
Chris: Is TelstraSuper good value?
We’re committed to providing competitive and cost-effective super services to our membership.
TelstraSuper is a profit-to-member fund which means any surplus generated by fees exceeding our costs benefits our membership as a whole through services to members as well as building our administration and operational risk reserves rather than paying shareholders. We’re run solely to benefit you as a member.
We’re an award winning fund – our investment options are high-performing over the long-term which could mean more money for you when you finish working.
We also offer competitive insurance cover so you can protect your lifestyle if you were unable to work; and member education services like webinars and seminars are available to help you understand your super.
C: Thank you for watching our recap of common questions. At TelstraSuper our sole objective is to help you achieve a financially secure future – and we’ll continue to do that in 2019. If there’s any way we can help please get in contact with our friendly team. Have a wonderful festive season and a terrific New Year.