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Half Year Investment Update
December 2019

Investment snapshot

  • All VicSuper investment options delivered returns above their investment objectives to 31 December 2019
  • The majority of VicSuper investment options delivered strong one year returns, based on positive underlying asset class returns
  • Despite the generally strong returns in 2019, we retain a cautious outlook given geopolitical risks and a slowing global economy


One year return1 to 31/12/19 for the VicSuper Flexible Income Capital Stable investment option:

10.88%



VicSuper Flexible Income returns

We are pleased to let you know that all VicSuper investment options delivered returns above their performance objectives to 31 December 2019. Returns for the majority of our investment options were strong over one year. These were buoyed by an underlying allocation to share markets which experienced exceptionally strong performance in 2019, notably 23.77% in Australian shares2 and 27.97% in international shares3. Share markets benefited greatly from supportive monetary policy (typically lower central bank interest rates) and a reduction in the pessimism that had plagued the latter part of 2018.

Returns for all of our Flexible Income investment options are set out below.

VicSuper Flexible Income investment options
Periods to 31 Dec 2019 Cash  Captial Secure Capital Stable  Balanced  Socially Conscious4 Growth  Equitey Growth  Australian Shares5
1 year (%) 1.64 7.81 10.88 14.67 15.62 16.73 23.13 26.42
3 years (% pa) 1.86 5.55 7.37 9.08 - 10.09 12.20 11.80
5 years (% pa) 2.02 5.29 6.77 8.10 - 8.86 10.43 10.91
10 years (% pa)  2.96 6.06 7.54 8.73 - 9.37 10.67 -
Note that past performance is not a reliable indicator of future performance.

 

TTR returns are not included here. These can be found in the Half Year Benefit Statement for Flexible Income as well as on our website in investments.

For more information about VicSuper investment returns, go to investment performance.

 

Investment outlook and strategy

While markets were strong in 2019, we maintain a cautious outlook and believe that 2020 will bring more challenging economic, market and geopolitical conditions. In our view, considerable investment uncertainty remains given ongoing tensions related to US-China trade relations, Brexit and the Middle East, as well as questions about the strength and resilience of the global economy. Geopolitical uncertainty, in particular, is likely to remain a theme affecting financial markets for many years to come. This means that we believe the strong returns seen over recent years are unlikely to be maintained at the same levels in the future. We are also conscious of the risk that periods of volatility could resurface at any time.

We are confident that our disciplined, risk-aware, and long-term approach to investment remains appropriate for the market conditions ahead, and is also consistent with our objective of delivering competitive returns for our members over the long-term. We continue to look for ways to improve the resilience of our investment options in different market environments. During the year we continued to diversify our portfolios through the addition of further infrastructure and property investments, and we further enhanced our approach to making dynamic shifts in asset allocation in order to improve downside protection against weakness in share markets.

For more information about our investment approach and strategy, go to investments.

 

Responsible investment for your future

Responsible investment is a key part of our investment approach. Its helps improve our members’ retirement savings and incomes by considering the full range of factors relevant to investment risk and return, by being an engaged long-term investor, and by making investments that positively contribute to the world in which our members live and retire.

We’re proud to be in the top 10% of global asset owners recognised for their responsible investment approach, through inclusion in the Principles for Responsible Investment Leaders’ Group. This recognition, combined with our strong investment returns, demonstrates our belief that competitive returns and responsible investment can go hand-in-hand.

For more information about our approach to responsible investment, go to our responsible investment approach.

 

Talk to VicSuper about your retirement investments

It can help to talk to someone about your retirement, your investment options, and how we’re investing your money. Remember that at VicSuper, you currently get superannuation advice at no additional cost in most cases.

For more information about our advice services, go to advice.

For more information about how we aim to deliver competitive returns for our members, go to investments.




Important information
This document has been prepared without taking into account your objectives, financial situation or needs. You should therefore consider the appropriateness of the advice in light of your individual circumstances before acting on the advice. You should also obtain and consider a copy of the relevant Product Disclosure Statement available at www.vicsuper.com.au before making any decisions. VicSuper Pty Ltd ABN 69 087 619 412, AFSL 237333, Trustee of Victorian Superannuation Fund ABN 85 977 964 496.


Notes:
1 The Capital Stable investment option of VicSuper Flexible Income with the Transition to Retirement (TTR) feature returned 9.61% for the 2019 calendar year. Returns differ from VicSuper Flexible Income without TTR due to differences in tax. Returns for all VicSuper Flexible Income investment options are available at vicsuper.com.au/investments. The VicSuper Flexible Income Capital Stable investment option had the highest level of assets of all Flexible Income investment options as of 31 December 2019.
2 S&P/ASX 300 Accumulation Index
3 MSCI World Index (unhedged in A$)
4 The strategic asset allocation for the Socially Conscious option (renamed from the Equity Growth Sustainability option) changed on 1 February 2017 as a result of a restructure to the option. The investment objective for this option differs materially from that applicable prior to 1 February 2017 due to the change in strategic asset allocation (decreased exposure to growth assets and increased exposure to defensive assets). Therefore past returns relating to the period prior to 1 February 2017 have not been included in the calculation of investment returns above.
5The VicSuper Flexible Income Australian Shares investment option was introduced on 5 February 2013.
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