A market bounce in March has supported super fund performance, with the global economy maintaining a reasonable degree of momentum. However, inflation concerns continue to mount as consumers face cost pressures.

The Reserve Bank of Australia kept rates on hold at a low of 0.1% citing ongoing inflation challenges and uncertainty due to the war in the Ukraine, although we see expectations of interest rate rises increasing.

Leading superannuation research house SuperRatings estimates that the median balanced option rose by 1.1% in March. Over the financial year to 31 March 2022, we see an estimated return of 2.4% for the median balanced option.

Kirby Rappell, Executive Director of SuperRatings said, “It is pleasing to see performance recover over the month, as we head towards the end of the financial year. It has been a rockier year for super fund members, although funds seem to be navigating the uncertainty reasonably well. While many Australians feel the impact of natural disasters and increasing inflationary pressures, super continues to support improved long-term financial security for many.”

“I’ve said it before and I will say it again, it is important to focus on the long-term when it comes to your superannuation. The rebound in performance over the March period reinforces this, if a member had switched when they saw performance fall in February, they would have locked in the loss instead of benefiting from the recovery we have now seen.”

The median growth option increased by an estimated 1.6%. The capital stable option, which has less exposure to equity markets in favour of bonds and cash, rose by 0.1%.

Accumulation returns to March 2022

  Monthly 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SR50 Balanced (60-76) Index 1.1% 7.6% 7.5% 7.5% 6.9% 8.4%
SR50 Capital Stable (20-40) Index 0.1% 3.1% 3.7% 4.0% 4.0% 5.1%
SR50 Growth (77-90) Index 1.6% 9.2% 9.0% 8.8% 7.7% 9.5%

Source: SuperRatings estimates

Pension returns have also risen in March, with the median balanced pension option up an estimated 1.2%, compared to an increase of 1.8% for the median growth option, while performance is estimated to be flat at 0.0% for the capital stable option.

Pension returns to March 2022

  Monthly 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index 1.2% 7.8% 8.3% 8.1% 7.4% 9.4%
SRP50 Capital Stable (20-40) Index 0.0% 3.1% 4.0% 4.5% 4.3% 5.5%
SRP50 Growth (77-90) Index 1.8% 9.6% 9.6% 9.3% 8.5% 10.6%

Source: SuperRatings estimates

We estimate that the return over the financial year to March 2022 is sitting at 2.4% as shown below. Further, since the inception of superannuation, we have only seen 4 negative financial year returns (FY02: -3.1%, FY08: -6.4%, FY09: -12.7%, FY20: -0.8%). The average annual return over this period sits at around 7.2% pa which is ahead of fund objectives which are typically inflation + 3.0% over rolling 10-year periods.

Evidently, while the superannuation road may be bumpy at times, over the longer-term the typical balanced option shows a positive story for Australians.

Kirby Rappell commented, “We are currently on track to end the 2022 financial year in positive territory, depending on how investment markets perform over the June quarter, though performance will be far more muted than that observed in FY2021. While it is pleasing to see performance recover over the month of March, superannuation should be viewed with a long-term lens as there will be ups and downs over shorter term periods.”

Release ends

We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au

 

Lonsec has expanded its support of Managed Accounts on the AMP North and CFS FirstWrap platforms with the launch of its Lonsec Listed Managed Portfolios.

The portfolios harness the depth and breadth of Australia’s leading research provider, allowing investors access to a diversified portfolio of listed securities incorporating Lonsec’s Dynamic Asset Allocation.

“These managed portfolios give financial advisers access to investment solutions supported by one of Australia’s largest investment research and consulting teams,” said Lonsec CEO Mike Wright.

“Being able to draw on our investment selection and portfolio construction expertise can be a game changer for advisers, and we’re proud to be offer the Listed portfolios to North and FirstWrap users.”

Lonsec provide three Listed portfolios: Balanced, Growth and High Growth. Each are designed to achieve different risk and investment objectives over various timeframes. They are constructed using a range of growth and defensive listed assets such as Australian and global equities, property, bonds, and alternative assets and are backed by Lonsec’s rigorous governance and review process.

“The Listed portfolios have been designed for investors looking for capital growth and income over the medium to long term from listed assets and use a combination of active and passive securities to achieve these growth and income objectives,” said Danial Moradi, Portfolio Manager for Listed Products.

In addition to the Listed portfolios, the Lonsec Separately Managed Account – Core Portfolio will also be available on FirstWrap. This portfolio employs an active, concentrated, low-turnover strategy focused on quality Australian large cap shares.

“We are excited to expand the distribution channels for these portfolios, making them available to a broader group of advisers and their clients” said Moradi.

Inclusion on AMP North and CFS FirstWrap further expands the availability of the Lonsec supported Managed Account offering, following their existing availability on the BT, Macquarie, HUB24, Netwealth and Praemium platforms. Lonsec is one of Australia’s fastest growing Managed Accounts portfolio managers, with over $200m net inflows recorded into the portfolios they manage in February 2022.

Release ends

For more information, please contact:

Rob Hardy
Rob.Hardy@lonsec.com.au

Lonsec has announced three key hires to their Lonsec Investment Solutions (LIS) team to support the significant expansion of their managed account and consulting businesses.

Ron Mehmet, currently Head of Fixed Income Research at Lonsec Research will move to LIS as a Senior Consultant, to work with consulting clients and support Deanne Baker, Multi Asset Portfolio Manager, with portfolio management. Ron brings a wealth of fixed interest experience and broader portfolio construction skills which will add immensely to LIS’s capabilities.

Nicolas Ward is also joining LIS as a Senior Consultant. Nick joins from Quilla, the specialist managed portfolio manager, and brings a strong understanding of managed accounts, having worked closely with advisory firms in running bespoke managed account solutions. Prior to Quilla, Nick worked as NAB/MLC’s Private Investment Consulting (PIC) division, providing consulting services to the NAB aligned adviser network.

Amber Sunil will be joining LIS from Lonsec Research as an Investment Consultant. Amber will work closely with LIS Senior Consultants to service clients, as well as supporting the client reporting and managed account operational functions. Amber has a depth of product knowledge notably within global equities, which will be valuable to LIS’s portfolio construction process.

These three appointments bolster LIS’s managed accounts capabilities, which has seen significant expansion over the past six months. Inflows hit a record, exceeding $200m in February and bespoke managed portfolios have recently launched with CFS and Count. The LIS appointments follow the recent expansion of the Sales Team with dedicated Practice Transformation consultants.

CIO and Executive Director, Lukasz de Pourbaix, says “I am pleased to welcome Ron, Nicolas and Amber to the LIS team, and it is testament to the high quality individuals within the broader Lonsec group that two of the three candidates have come from Lonsec Research”.

Release ends

For more information, please contact:

Rob Hardy
Rob.Hardy@lonsec.com.au

Research House Lonsec has announced significant changes to its working policies, in response to the insights gained during the COVID shutdown and feedback from its staff.

The necessity of working from home during the pandemic showed that staff were able to successfully carry out their regular daily tasks from remote locations. It has helped redefine what time in the office actually looks like and what purpose it serves.

Whilst Lonsec still believes that genuine one-to-one interaction with colleagues is extremely valuable in building culture, relationships and sharing knowledge and ideas, this does not need to be every day. As a result, the company is permanently moving to a hybrid model, of at least two days in the office each week, and working from home the other days. For some roles, that do not require regular attendance in the office, employees are able to request a move to ‘remote’ locations and this has resulted in some staff now being located in Queensland.

This ability to work from ‘anywhere’ for short periods, has been extended to all staff, with them now having the option to work from anywhere in the world, for up to 4 weeks per year. This has been particularly welcomed by the many Lonsec team members not originally from Australia, or with family overseas. In further recognition of Lonsec’s cultural diversity, allowance has been made for those team members who may celebrate religious festivals other than those typically recognised with an Australian public holiday, by allowing them to work current public holidays and take off dates of their choosing.

Chief Executive Officer, Michael Wright said “considerable thought and time was put into developing our Lonsec@Work program. We believe strongly in supporting our employees’ broader wellbeing and believe that these significant, and industry leading benefits will enable us to attract and retain the best employees, and to genuinely allow staff to choose and enjoy the work life balance that works best for them”.

Release ends

For more information, contact:
Rob Hardy
Robert.Hardy@lonsec.com.au
1300 826 395

When it comes to choosing a good financial adviser, it is important to find someone that you trust, shares your investment ethos and who has experience investing for someone at your stage in life.

Whether you are nearing retirement or just starting your investing journey, asking these five questions will help you find the right adviser with whom you can build a good partnership.

Who is the adviser’s ideal client?

It is important to understand who their ideal client is, the market in which they operate and if that is for you. For example, if you are in pre-retirement, you want an adviser that has experience in this area as they will be more familiar with your needs.

Choosing someone who has experience with your life stage will also guide how they interact with you. For example, advisers dealing with younger clients are more likely to embrace video and other digital platforms.

You need to feel comfortable with how an adviser communicates with you and that you can understand and use the information presented.

What is the proposition?

You need to understand what areas the adviser is most comfortable with, their particular areas of expertise and how innovative and open to new areas of advice they are.

It is also crucial to understand their approach to ongoing advice, and if that resonates with how you want the relationship to evolve.

Other things to consider include how often they communicate with you to show how your investments are performing, how receptive they are to you contacting them and what you can expect from your review meetings.

What is their investing approach?

What is the adviser’s approach to driving income, growth and managing portfolio risk? For example, if your investment goal is to generate income, you should choose an adviser that can target this. Conversely, if you are happy to forgo returns to manage your risk more closely, an adviser that understands this is paramount.

Active or passive investments?

You should know the adviser’s investment philosophy for active or passive investments. Some advocate passive investments, such as index funds, while others favour actively managed portfolios.
Preferences for passive or active investments have an impact on costs, potential risks and returns. An adviser should be clear about these when discussing investment options.

Another thing to consider is how an adviser manages cash in a portfolio.

While returns from cash are negligible right now, it does have a role to play in a diversified portfolio. Asking about an adviser’s approach to cash can give you an idea into how they manage portfolio risk.

Listed or unlisted investments?

If liquidity and transparency of holdings is important to you, an adviser comfortable managing portfolios made up of assets with these characteristics may be more appropriate for you.

Holding listed and unlisted assets may have different tax and cost implications and may also impact the regularity of reporting. The adviser needs to have experience managing these in a way that is appropriate to your portfolio and life stage.

Working with a financial adviser is a partnership and asking these questions of prospective advisers can help you decide if you can work with them and trust them with your money.


IMPORTANT NOTICE: This document is published by Lonsec Investment Solutions Pty Ltd ACN 608 837 583, a Corporate Authorised Representative (CAR 1236821) (LIS) of Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec Research).  LIS creates the model portfolios it distributes using the investment research provided by Lonsec Research but LIS has not had any involvement in the investment research process for Lonsec Research. LIS and Lonsec Research are owned by Lonsec Holdings Pty Ltd ACN 151 235 406. Please read the following before making any investment decision about any financial product mentioned in this document.

DISCLOSURE AT THE DATE OF PUBLICATION: Lonsec Research receives a fee from the relevant fund manager or product issuer(s) for researching financial products (using objective criteria) which may be referred to in this document. Lonsec Research may also receive a fee from the fund manager or product issuer(s) for subscribing to research content and other Lonsec Research services.  LIS receives a fee for providing the model portfolios to financial services organisations and professionals. LIS’ and Lonsec Research’s fees are not linked to the financial product rating(s) outcome or the inclusion of the financial product(s) in model portfolios. LIS and Lonsec Research and their representatives and/or their associates may hold any financial product(s) referred to in this document, but details of these holdings are not known to the Lonsec Research analyst(s).

WARNINGS: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to general advice and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (“financial circumstances”) of any particular person. Before making an investment decision based on the rating or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness.  If the financial advice relates to the acquisition or possible acquisition of a particular financial product, the reader should obtain and consider the Investment Statement or the Product Disclosure Statement for each financial product before making any decision about whether to acquire the financial product.

DISCLAIMER: No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented in this document, which is drawn from public information not verified by LIS. The information contained in this document is current as at the date of publication. Financial conclusions, ratings and advice are reasonably held at the time of publication but subject to change without notice. LIS assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, LIS and Lonsec Research, their directors, officers, employees and agents disclaim all liability for any error or inaccuracy in, misstatement or omission from, this document or any loss or damage suffered by the reader or any other person as a consequence of relying upon it.

Copyright © 2022 Lonsec Investment Solutions Pty Ltd ACN 608 837 583 (LIS). This document may also contain third party supplied material that is subject to copyright.  The same restrictions that apply to LIS copyrighted material, apply to such third-party content.

Super fund performance was impacted in January following a turbulent month for domestic and global equities, as rising inflation concerns, and looming rate hikes added to investors’ worries.

Supply shortages relating to COVID-19 have put upward pressure on input costs for companies around the world. As a result, we have seen the price of goods and services such as food, automotive fuel, and healthcare bearing the brunt of the impact.

However, these pressures are hoped to ease as supply chains reopen and as we emerge out of the pandemic. Nonetheless, markets have been spooked by the situation which has resulted in a rocky start to the year for super funds.

According to estimates from leading superannuation research house SuperRatings, the median balanced option returned -2.1% in January following the market sell-off, despite some of the initial losses being recovered towards the end of the month reducing the negative impact.

“Falling interest rates have supported rising asset prices and we have seen extremely strong returns over the past 5, 10 and 20 years. Inflation has been within the RBA’s target for much of this time. However, we are seeing an uptick here which has flow on effects for investment markets and the super balances of Australians,” said SuperRatings Executive Director Kirby Rappell.

Mr Rappell continued “Always remember, only about 50% of investments are in shares so your super should be less volatile if you are in a balanced option or a more conservative option. This means that members sitting in these options are not as affected by the ups and downs in stock markets we have seen recently.”

Super funds still have some way to go before recovering from the latest market drop. The median growth option is down an estimated 2.9%. The capital stable option, which includes more defensive assets like bonds and cash, has fared relatively better, falling only 0.9%.

Accumulation returns to January 2022

  YTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SR50 Balanced (60-76) Index -2.1% 10.9% 8.7% 8.0% 7.4% 8.7%
SR50 Capital Stable (20-40) Index -0.9% 4.5% 4.5% 4.4% 4.3% 5.3%
SR50 Growth (77-90) Index -2.9% 12.6% 10.2% 9.2% 8.3% 9.8%

Source: SuperRatings estimates

Pension returns have also fallen in January, with the median balanced pension option down an estimated 2.3%, compared to a fall of 3.2% for the median growth option and 1.1% for the capital stable option.

Pension returns to January 2022

  YTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index -2.3% 11.3% 9.6% 8.7% 7.9% 9.7%
SRP50 Capital Stable (20-40) Index -1.1% 4.9% 5.0% 4.9% 4.7% 5.8%
SRP50 Growth (77-90) Index -3.2% 13.1% 10.8% 10.0% 9.1% 11.0%

Source: SuperRatings estimates

We saw the RBA maintain the cash rate at 0.1% and signal the end of quantitative easing but this does not mean a rate rise is imminent.

Mr Rappell said “While we have seen super fund performance take a hit this month, it is important that people remember that super is a long-term investment. Trying to time the market can see members end up in a worse position, so it’s best to talk to your fund or an adviser before making any changes.

Looking ahead, it’s likely that we will need to embrace the increased volatility that may come from an increase in rates. This is a big shift given we have become so used to the trend of falling rates over an extended period. We have had a strong decade of super returns and we have been through a variety of market environments since 1992.”

Mr Rappell continued “A couple of things to consider, super funds delivered a return of 13.4% in 2021 and over the long-term super returns have exceeded the typical objective of CPI+3%. It’s about checking you are in the right long-term option and sticking to it. If you had switched to cash at the start of last year you would have seen a return of 0.1% instead of 13.4% for a balanced option”.

Remember, your super fund is focused on helping you to navigate these changing markets. Thinking long-term when it comes to strategy and blocking out shorter-term noise remains the pragmatic approach and is aligned with funds’ approaches.

Release ends

We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au

Require further information? Simply visit www.superratings.com.au

Analysis by SuperRatings has shown that paying attention to how your superannuation is invested pays dividends. SuperRatings has tracked the returns of the most common super options over the past 10 years with the results displayed in the chart below.

SuperRatings Executive Director, Kirby Rappell, says “A balance of $100,000 in Nov 2011 invested in a typical balanced option would now be worth $248,413, an increase of 148%. Compare that to a member invested in a cash option, whose balance would now be $123,178 – an increase of 23% and a shortfall relative to the balanced option outcome of over $125,000 – which emphasises the challenges for members with significant exposure to cash. While the balances of younger members grow strongly, those members trying to derive an income from their savings face some very real difficulties.”

SuperRatings sees the majority of pension assets sitting in Balanced, Conservative Balanced and Capital Stable options, with the latter two investing more in bonds and cash like investments. The median conservative balanced option grew to $210,292, while growth was more muted for capital stable members and those invested mainly in bonds through the typical diversified fixed interest option. There was a dip in balances due to the pandemic, with older members in more conservative options less impacted than growth focused accumulation members.

Looking at cash options more closely, over the last 10 years, a member sitting in cash would have seen a return of only 2.2% per annum. Mr Rappell continues “The experience of many Australians with exposure to cash has been extremely challenging. Reviewing your risk profile remains important, as retirees need to ensure they are invested in a way that helps them achieve their long-term objectives. We also need to see greater innovation in this space to ensure that super funds are able to help retirees achieve appropriate outcomes in retirement.”

SuperRatings recommends members consult their fund or an adviser they trust to help ensure any decision on how their super is invested is part of a long-term strategy.

November returns

November was another positive month for superannuation, as confidence remained high with vaccination rates hitting 90% and the economy opening up further. According to SuperRatings’ data, the median balanced, growth and capital stable options all rose an estimated 0.3% in November, with the balanced option returning an estimated 11.4% for the calendar year to date and the growth option returning an estimated 14.1% over the same period. However, returns for the past 6 months have been more muted, albeit positive, with greater volatility observed.

Accumulation returns to November 2021

FYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SR50 Balanced (60-76) Index 2.7% 12.7% 9.4% 8.5% 7.9% 9.0%
SR50 Capital Stable (20-40) Index 1.2% 5.3% 5.0% 4.7% 4.7% 5.5%
SR50 Growth (77-90) Index 3.3% 15.4% 11.1% 9.9% 8.9% 10.3%

Source: SuperRatings estimates

Pension returns were also positive in November. The median balanced pension option returned an estimated 0.3% over the month and 12.0% over the calendar year to date. The median pension growth option also returned an estimated 0.3% and the median capital stable option gained an estimated 0.4% through the month. Further, our latest estimates of the performance for the calendar year to date are 15.1% and 12.0% for the typical growth and capital stable options respectively.

Pension returns to November 2021

FYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index 2.7% 13.3% 10.3% 9.3% 8.4% 9.9%
SRP50 Capital Stable (20-40) Index 1.3% 5.7% 5.6% 5.3% 5.0% 6.0%
SRP50 Growth (77-90) Index 3.4% 16.5% 11.9% 10.8% 9.8% 11.4%

Source: SuperRatings estimates

Release ends

We welcome media enquiries regarding our research or information held in our database. We are also able to provide commentary and customised tables or charts for your use.

For more information contact:

Kirby Rappell
Executive Director
Tel: 1300 826 395
Mob: +61 408 250 725
Kirby.Rappell@superratings.com.au

Require further information? Simply visit www.superratings.com.au

Lonsec’s suite of managed portfolios are now available on BT Panorama with the addition of the Sustainable portfolios. The Sustainable portfolios provide greater choice for clients seeking investment strategies that align with their personal values and demonstrate strong environmental, social and governance (ESG) practices.

Recognising the growing demand for responsible investment solutions, Lonsec developed the Sustainable portfolios’ Balanced, Growth and High Growth risk profiles with a unique philosophy that looks through both lenses of ESG, which focus on the underlying managers’ process, approach and integration of ESG factors, along with Sustainability measures, which focus on the funds’ positive impact on the world.

To measure the portfolios’ contribution to society and the environment, Lonsec assess funds against the UN’s Sustainable Development Goals (SDG) framework. In this assessment, Lonsec looks at the activities of the companies held in a fund and net the positive contributions to the 17 SDGs against the negative impact of exposures to controversial industries.

Deanne Baker, Portfolio Manager for the Sustainable portfolios said, ‘The Sustainable portfolios now have close to a 12-month track record and, not only have they outperformed the Benchmark over the last 6 and 9 months, but they have also made positive contributions across a number of the SDGs including SDG 11 Sustainable Cities and Communities, SDG 3 Good Health and Well Being and SDG 1 No Poverty. With the addition of our Sustainable portfolios on BT Panorama, we are thrilled to offer an investment solution that aligns with the goals of our clients in conjunction with having a positive impact on the planet”.

Release ends
For more information, contact:
Rob Hardy
Robert.Hardy@lonsec.com.au
1300 826 395


IMPORTANT NOTICE: This document is published by Lonsec Investment Solutions Pty Ltd ACN 608 837 583, a Corporate Authorised Representative (CAR 1236821) (LIS) of Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec Research).  LIS creates the model portfolios it distributes using the investment research provided by Lonsec Research but LIS has not had any involvement in the investment research process for Lonsec Research. LIS and Lonsec Research are owned by Lonsec Holdings Pty Ltd ACN 151 235 406. Please read the following before making any investment decision about any financial product mentioned in this document.

DISCLOSURE AT THE DATE OF PUBLICATION: Lonsec Research receives a fee from the relevant fund manager or product issuer(s) for researching financial products (using objective criteria) which may be referred to in this document. Lonsec Research may also receive a fee from the fund manager or product issuer(s) for subscribing to research content and other Lonsec Research services.  LIS receives a fee for providing the model portfolios to financial services organisations and professionals. LIS’ and Lonsec Research’s fees are not linked to the financial product rating(s) outcome or the inclusion of the financial product(s) in model portfolios. LIS and Lonsec Research and their representatives and/or their associates may hold any financial product(s) referred to in this document, but details of these holdings are not known to the Lonsec Research analyst(s).

WARNINGS: Past performance is not a reliable indicator of future performance. Any express or implied rating or advice presented in this document is limited to general advice and based solely on consideration of the investment merits of the financial product(s) alone, without taking into account the investment objectives, financial situation and particular needs (“financial circumstances”) of any particular person. Before making an investment decision based on the rating or advice, the reader must consider whether it is personally appropriate in light of his or her financial circumstances or should seek independent financial advice on its appropriateness.  If the financial advice relates to the acquisition or possible acquisition of a particular financial product, the reader should obtain and consider the Investment Statement or the Product Disclosure Statement for each financial product before making any decision about whether to acquire the financial product.

DISCLAIMER: No representation, warranty or undertaking is given or made in relation to the accuracy or completeness of the information presented in this document, which is drawn from public information not verified by LIS. The information contained in this document is current as at the date of publication. Financial conclusions, ratings and advice are reasonably held at the time of publication but subject to change without notice. LIS assumes no obligation to update this document following publication. Except for any liability which cannot be excluded, LIS and Lonsec Research, their directors, officers, employees and agents disclaim all liability for any error or inaccuracy in, misstatement or omission from, this document or any loss or damage suffered by the reader or any other person as a consequence of relying upon it.

Copyright © 2021 Lonsec Investment Solutions Pty Ltd ACN 608 837 583 (LIS). This document may also contain third party supplied material that is subject to copyright.  The same restrictions that apply to LIS copyrighted material, apply to such third-party content.

With half the country in what seems never ending rounds of lockdowns and pandemic fatigue setting in, one of the last things most Australians want to do is look at their Superannuation balances and investment options. That is, however, exactly what SuperRatings is wanting us to do, as neglecting your super or responding to short term market moves can have a detrimental effect on your super balance.

SuperRatings Executive Director Kirby Rappell says, ‘We looked at the impact of switching out of a balanced or growth option and into cash at the start of the pandemic and found that those with a balance of $100,000 in January 2020 and who switched to cash at the end of March would now be around $22-27,000 worse off than if they had not switched.’

This effect of switching into cash as a response to market turmoil is also seen when looking at returns over the past 15 years. In this period, a typical balanced Super option has risen substantially, with a balance of $100,000 in July 2006 accumulating to $247,557, more than doubling in size. Those members investing in a growth option have experienced an even stronger result, with a similar starting balance growing to $254,006. Share focused options have delivered the highest returns, with the median Australian shares option growing to $276,099 and the median international shares option growing to $271,051, though these types of options involve greater risks. Over the same period, a $100,000 balance invested in cash would only be worth $151,158 today.

When considering your Super options, you don’t need to go it alone as many Super funds provide advice and tools to their members. Says Mr Rappell, ‘Most funds will offer scaled advice for free or at a low cost, with members able to get advice on topics such as contributions, investment options, insurance in the fund and the transition to retirement.’ Scaled advice is general in nature so you will need to check if your situation and goals align with the advice.
Continues Mr Rappell, ‘For members who want more tailored advice, some funds will offer comprehensive advice that will also take into account your financial assets outside of superannuation.’ While there will be a cost associated with this comprehensive advice, most funds will allow the cost of the advice to be deducted from the superannuation account, just make sure you check any costs and how they can be paid before agreeing to get the advice.
Looking at more recent returns, balances continued to grow in July. The typical balanced option returned an estimated 1.3% over the month and 18.5% over the year. The typical growth option returned an estimated 1.3% for the month and the median capital stable option also increased 0.9% in the month.

Accumulation returns to July 2021

FYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SR50 Balanced (60-76) Index 1.3% 18.5% 7.9% 8.4% 8.0% 8.6%
SR50 Capital Stable (20-40) Index 0.9% 7.8% 4.5% 4.5% 4.8% 5.3%
SR50 Growth (77-90) Index 1.3% 22.7% 9.2% 9.5% 8.9% 9.6%

Source: SuperRatings estimates

Pension returns were also positive in July. The median balanced pension option returned an estimated 1.3% over the month and 20.0% over the year. The median pension growth option returned an estimated 1.5% and the median capital stable option also rose an estimated 0.9% in the month.

Pension returns to July 2021

FYTD 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index 1.3% 20.0% 8.4% 9.1% 8.5% 9.5%
SRP50 Capital Stable (20-40) Index 0.9% 8.6% 5.2% 5.2% 5.2% 5.9%
SRP50 Growth (77-90) Index 1.5% 24.4% 9.7% 10.3% 9.8% 10.6%

Source: SuperRatings estimates

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Lonsec has welcomed key senior appointments with Mike Wright joining as CEO and Kevin Brennan as Chief Information Officer (CIO). These appointments follow the recent renewal of the Lonsec board.

Mike has over 25 years’ experience in leading businesses and teams within Financial Services and joined from Xplore Wealth Ltd (ASX: XPL.AX), where he was CEO and successfully led the friendly takeover to Hub24 (ASX: HUB.AX), a leading independent investment platform.

Mike has set himself an ambitious challenge for his first 100 days with the business, meeting with all 100+ employees, key partners and clients and says, ‘At a time when the financial services industry is going through so much change, it is incredibly exciting and reassuring to join a company like Lonsec that is so committed to supporting Advisers and Funds through industry changes.’

Mike joins at a dynamic time for Lonsec, with the Lonsec Managed Accounts hitting $2bn funds under management in July 2021 (up from $1bn FUM in October 2020), as well as being fittingly placed to support Advisers and their clients focus on sustainable and ethical investment strategies.

Lonsec has been at the forefront of supporting increased investor appetite for sustainable and ethical investments that also provide a solid return. In response, they developed the Lonsec Sustainable Managed Accounts to provide greater choice for clients seeking investment strategies that align with their personal values and demonstrate strong environmental, social and governance (ESG) practices.
Unique in the market, Lonsec Sustainable Managed Accounts combines both ESG, which focus on the underlying manager’s process to ESG factors and Sustainability measures, which focuses on the funds positive impact on the world.

The Lonsec Sustainable Managed Accounts have just been added to the Macquarie Wrap Platform and are also available on Hub24 and Netwealth.

Lonsec is also fulfilling its thought leadership mandate by launching a Sustainability program to continue to educate investors. Lonsec’s Head of Sustainability, Tony Adams says ‘With the Lonsec Sustainability program, we want to help financial advisers and their clients take a sustainable approach to investing by sharing insights and research powered by Lonsec and a range of industry leaders.’ Via webinars and articles, the Lonsec Sustainability program has recently covered subjects such as ‘greenwashing’ and how Advisers can start sustainable investing conversations with their clients. This is a partner program to the long running Lonsec Retire program, now in its ninth year.

Kevin Brennan is excited to be joining Lonsec as Chief Information Officer. Kevin brings more than 20 years’ experience running large technology teams in the wealth industry. His key focus will be to elevate the role of technology within Lonsec and drive a comprehensive technology and data strategy to transform its service architecture and further accelerate business growth.

Mike concludes, ‘We are so fortunate to be in a strong position to continue to honourably help Advisers, Managers and investors with insights and solutions to help them navigate the immense challenges that many of them face and share in common.’

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For more information, contact:

Rob Hardy
Robert.Hardy@lonsec.com.au
1300 826 395

Important information: Any express or implied rating or advice is limited to general advice, it doesn’t consider any personal needs, goals or objectives.  Before making any decision about financial products, consider whether it is personally appropriate for you in light of your personal circumstances. Obtain and consider the Product Disclosure Statement for each financial product and seek professional personal advice before making any decisions regarding a financial product.