Our 1970s to 90s investment options all exceeded 10.5 per cent returns in the calendar year. Mark Rider explains.
- Investment options with the most growth assets – such as shares and property – were the best performers, thanks to a strong result from local and international sharemarkets.
- The standout result was the 1990s investment option, which delivered an 11.8 per cent return for the year, and 5.18 per cent for the last quarter of 2017 alone.
- Investment options with a higher allocation to defensive assets – such as cash and bonds – also fared well, rising between 5.26 per cent and 8.79 per cent for the year.
- At the end of this article we’ve got some ideas on how you can take advantage of these gains.
A robust sharemarket meant all ANZ Smart Choice Super lifestage investment options performed strongly in 2017, returning some of the best performances of past years.
As you can read in the table below, returns for the year ranged from 11.8 per cent for those born in the 1990s (which puts them in our 1990s investment option), to 5.26 per cent for the 1940s.
Note: Returns quoted use the unit price which is calculated using the net asset values for the relevant month end. Please note that all returns are after the deduction of investment fees. Reporting data is to December 31, 2017. p.a. = per annum. Past performance is not a reliable indicator of future performance. The inception of the 2000s investment option was on the 18th February 2017 and therefore only the three and six months performance data are available.
Our members belong to investment options based on their decade of birth: younger members’ savings are mostly allocated to “growth assets” (higher risk investments with higher potential returns), which lean toward “defensive assets” (lower risk investments with greater stability) as members age.
Options with the most growth assets – the 1970s, 80s, 90s and the 2000s – had the highest returns as Australian and global shares rallied on solid global growth and earnings outlook.
In the ‘1 Year’ column of the table above you can see how much your investment option grew in 2017, the ‘3 Months’ column shows growth in the last quarter of the year (October to December), which was a particularly strong one. In the last column, ‘3 Years’ you can see the average return over the past three years (2015 to 2017), and that 2017 has clearly delivered higher returns.
Why returns in ANZ Smart Choice Super increased
- Global shares were mostly up in the December quarter, topping off a very strong year for sharemarkets. Fixed-interest assets (such as bonds) also did well.
- The Australian sharemarket also rallied strongly in the December quarter, with the S&P/ASX 300 Index returning 7.7 per cent.
- Sharemarkets were buoyed because talk of US tax cuts excited investors, the US economy continued to perform well, Australian business confidence and employment was solid, and interest rates remained on hold.
US shares were up again in the December quarter as a strong earnings season and the passing of the long-anticipated tax-reform legislation boosted investor sentiment. The weaker US dollar and solid global growth continued to drive emerging-markets shares. While growth has continued to improve in Europe, its sharemarkets lost some momentum.
The Australian sharemarket rallied strongly in the last quarter of 2017, with the S&P/ASX 300 Index returning 7.7 per cent, outpacing similar indices around the world.
Australian business confidence and employment have also been solid, and earnings, following the mid-2017 dip, are now being revised up. The Reserve Bank of Australia kept interest rates on hold.
Around the world interest rates remained fairly steady, in line with expectations. And signs of economic growth were encouraging. In Europe and the US, central banks started to relax some of the intense activity they’ve been doing to stimulate their economies – and they managed to do it without spooking investors or the market.
Global fixed interest outperformed local fixed interest, returning 0.9 per cent and 0.4 per cent compared with Australia’s 0.4 per cent.
How choose-your-own investment options performed
Those ANZ Smart Choice members that chose their own investments can see results for different assets they invested in, in the table below. In the past quarter, all asset classes had positive returns.
The highest return came from the Australian shares fund, up 6.93 per cent in the three months to December 2017, and 11.27 per cent over the year. The international equities fund (unhedged) also performed well, delivering returns of 5.17 per cent and 11.87 per cent over the year.
Note: Returns quoted use the unit price which is calculated using the net asset values for the relevant month end. All returns are after the deduction of investment fees. Reporting data is to December 31, 2017. PA = per annum. Past performance is not a reliable indicator of future performance. Note the Australian Fixed Income fund’s inception was on 18th February 2017 and therefore only the three and six months performance data are available. The investment options for International Equities (unhedged) and the Global Smaller Companies started on the 25th May 2015 and therefore the three-year performance data is not yet available. The Global Small Companies investment option is not available to members of ANZ Smart Choice Super and Pension.
Members of ANZ Smart Choice Super for employers and their employees can access the latest returns across the full suite of investment choices online or by visiting the ‘Investment portfolio’ page via their ANZ Smart Choice Super account in ANZ Internet Banking.
(Note: The above investment returns are not applicable to QBE members.)