Investing for your future

  • Our Chief Investment Officer (CIO), Andrew Howard, reviews the last financial year and takes a look at what has driven returns for VicSuper’s members. He also provides an update on our investment strategy and how we’re putting members’ retirement savings to work with the aim of delivering on our long-term investment objectives.

    Listen to the podcast:

    Steady, long-term outcomes

    We’re pleased to have delivered another year of solid performance in the 2017/18 financial year for our MySuper investment option. Importantly, we’ve continued to deliver strong returns over the long-term:

    • Our MySuper option returned 9.1% over the 12 months to 30 June 2018—the ninth straight year of positive investment returns.
    • Longer-term returns are strong, with the MySuper investment option delivering a five year return of 9.7% p.a. and over seven years a return of 9.0% p.a.
    • As at 30 June 2018, all investment options (except cash) were ahead of their respective 10-year performance objectives.
    View all our 30 June investment returns.

    At VicSuper, we’re about delivering steady, long-term investment outcomes for members. We believe it is important to be disciplined, long-term investors and not react to short-term market ‘noise’ or headlines. A key part of this is ensuring we have an investment strategy in place that is well equipped to deliver positive returns in both good and bad market environments.

    Investing that’s proactive, not reactive

    Financial year 2018 was another positive year for investors with most key share markets, both here and around the world, delivering double-digit returns. This was a strong driver of performance generated for VicSuper members last year. However, as we’ve been saying for some time, we believe we are entering a more difficult investment environment. It is important to remember that since the GFC (now 10 years ago), share markets have had extremely favourable conditions through supportive monetary (interest rate) and fiscal (government) policies.

    This is best illustrated by the record low interest rates—both here and overseas—since the end of the GFC as central banks worked hard to help kick-start the global economy. The extreme measures taken have definitely paid off with the global economy experiencing a sustained period of strong, synchronised growth (developed and emerging economies have been strong at the same time) and with many major share markets today well above their pre-GFC highs.

    But record low interest rates appear to be coming to an end and we have already seen interest rates begin to rise in the US. In addition, as share markets continue to move higher they have become increasingly expensive, and more recently, there have been growing concerns about a global trade war. This all leads to an investment environment that we believe will be increasingly challenging for investors.

    To better equip the Fund for what we think will be a lower return environment, we have been actively repositioning the fund, enhancing its diversification to help smooth returns and better manage risk. In short, we believe it is risky to continue to rely on share markets going up after what has been an extraordinary period of performance since the end of the GFC. So over the last year we have made a number of new investments in property and infrastructure, both in Australia and overseas. Below are some pictures of the kinds of property and infrastructure assets we invested in last financial year.

    US and European property—US offices; European retail centres in Helsinki and Italy; innovative office buildings in London.

    helsinki shopping center
    Kamppi Shopping Centre, Helsinki

    Devonshire square
    Devonshire Square, London

    Kamppi is a well located, high quality shopping centre in Helsinki, Finland. It has its own subway (rail) station and bus terminal and has the highest foot traffic of any shopping centre in the Nordics. Key tenants include a mix of local and international brands including Bestseller, Levi’s, Guess, Calvin Klein, Stadium and Clas Ohlson.

    Devonshire Square is a unique collection of multi-let office buildings over five acres near Liverpool St train station in the financial heart of London. The key tenant of Devonshire Square is WeWork and will be its London headquarters. WeWork is a network of innovative shared workspaces that encourage collaboration, initially aimed at small businesses and entrepreneurs such as technology-based start-up companies, but is now used by both small and big business alike.

    European infrastructure—renewable energy (for example, wind farms in Portugal); a Scandinavian ferry business.

    Finerge is the second largest operator of onshore wind energy production in Portugal and is made up of 27 separate wind farms and 499 individual turbines, predominantly in the northern and western regions of Portugal. During 2017, Finerge generated 4% of Portugal’s electricity demand.

    Australian infrastructure and renewables—solar farms (e.g. Ross River Solar Farm); airports; train stations, ports.
    Ross river farm


    Ross River Solar Farm is approximately 20km south west of Townsville on the site of a former mango farm. Its location is ideal due to the high solar irradiation with an average of 320 days of sunshine annually. It is made up of 420,000 panels and is expected to generate enough power for approximately 54,000 homes. The project is still under construction with an expected completion date of September 2018. VicSuper owns 25% of Ross River Solar Farm alongside other investors including the Clean Energy Finance Corporation.

    Ross River Solar Farm, Queensland

     

    An investment strategy that builds and protects members’ retirement savings

    Our investment strategy is about building and protecting members’ retirement savings. We’re disciplined investors—we invest in attractive opportunities when they become available (e.g. our property and infrastructure assets) but are cautious when required (for example, protecting the portfolio from potential falls in share markets).

    If there’s one lesson from the past year, it’s to keep focused on the long-term and the bigger investment picture—as opposed to a knee-jerk reaction to short-term fluctuations. By sticking to our investment strategy while keeping an eye out for attractive investment opportunities, we continue to generate good long-term returns for members.

    — Discover more about how we invest your super

    — Discover more about the value you get as a VicSuper member
    Our Chief Investment Officer (CIO), Andrew Howard, reviews the last financial year and takes a look at what has driven returns for VicSuper’s members. He also provides an update on our investment strategy and how we’re putting members’ retirement savings to work with the aim of delivering on our long-term investment objectives.

    Listen to the podcast:

    Steady, long-term outcomes

    We’re pleased to have delivered another year of solid performance in the 2017/18 financial year for our MySuper investment option. Importantly, we’ve continued to deliver strong returns over the long-term:

    • Our MySuper option returned 9.1% over the 12 months to 30 June 2018—the ninth straight year of positive investment returns.
    • Longer-term returns are strong, with the MySuper investment option delivering a five year return of 9.7% p.a. and over seven years a return of 9.0% p.a.
    • As at 30 June 2018, all investment options (except cash) were ahead of their respective 10-year performance objectives.
    View all our 30 June investment returns.

    At VicSuper, we’re about delivering steady, long-term investment outcomes for members. We believe it is important to be disciplined, long-term investors and not react to short-term market ‘noise’ or headlines. A key part of this is ensuring we have an investment strategy in place that is well equipped to deliver positive returns in both good and bad market environments.

    Investing that’s proactive, not reactive

    Financial year 2018 was another positive year for investors with most key share markets, both here and around the world, delivering double-digit returns. This was a strong driver of performance generated for VicSuper members last year. However, as we’ve been saying for some time, we believe we are entering a more difficult investment environment. It is important to remember that since the GFC (now 10 years ago), share markets have had extremely favourable conditions through supportive monetary (interest rate) and fiscal (government) policies.

    This is best illustrated by the record low interest rates—both here and overseas—since the end of the GFC as central banks worked hard to help kick-start the global economy. The extreme measures taken have definitely paid off with the global economy experiencing a sustained period of strong, synchronised growth (developed and emerging economies have been strong at the same time) and with many major share markets today well above their pre-GFC highs.

    But record low interest rates appear to be coming to an end and we have already seen interest rates begin to rise in the US. In addition, as share markets continue to move higher they have become increasingly expensive, and more recently, there have been growing concerns about a global trade war. This all leads to an investment environment that we believe will be increasingly challenging for investors.

    To better equip the Fund for what we think will be a lower return environment, we have been actively repositioning the fund, enhancing its diversification to help smooth returns and better manage risk. In short, we believe it is risky to continue to rely on share markets going up after what has been an extraordinary period of performance since the end of the GFC. So over the last year we have made a number of new investments in property and infrastructure, both in Australia and overseas. Below are some pictures of the kinds of property and infrastructure assets we invested in last financial year.

    US and European property—US offices; European retail centres in Helsinki and Italy; innovative office buildings in London.

    helsinki shopping center
    Kamppi Shopping Centre, Helsinki

    Kamppi is a well located, high quality shopping centre in Helsinki, Finland. It has its own subway (rail) station and bus terminal and has the highest foot traffic of any shopping centre in the Nordics. Key tenants include a mix of local and international brands including Bestseller, Levi’s, Guess, Calvin Klein, Stadium and Clas Ohlson.

    Devonshire square
    Devonshire Square, London

    Devonshire Square is a unique collection of multi-let office buildings over five acres near Liverpool St train station in the financial heart of London. The key tenant of Devonshire Square is WeWork and will be its London headquarters.

    European infrastructure—renewable energy (for example, wind farms in Portugal); a Scandinavian ferry business.

    Finerge is the second largest operator of onshore wind energy production in Portugal and is made up of 27 separate wind farms and 499 individual turbines, predominantly in the northern and western regions of Portugal. During 2017, Finerge generated 4% of Portugal’s electricity demand.

    Australian infrastructure and renewables—solar farms (e.g. Ross River Solar Farm); airports; train stations, ports.

    Ross river farm
    Ross River Solar Farm, Queensland

    Ross River Solar Farm is approximately 20km south west of Townsville on the site of a former mango farm. Its location is ideal due to the high solar irradiation with an average of 320 days of sunshine annually. It is made up of 420,000 panels and is expected to generate enough power for approximately 54,000 homes. The project is still under construction with an expected completion date of September 2018. VicSuper owns 25% of Ross River Solar Farm alongside other investors including the Clean Energy Finance Corporation.

    An investment strategy that builds and protects members’ retirement savings

    Our investment strategy is about building and protecting members’ retirement savings. We’re disciplined investors—we invest in attractive opportunities when they become available (e.g. our property and infrastructure assets) but are cautious when required (for example, protecting the portfolio from potential falls in share markets).

    If there’s one lesson from the past year, it’s to keep focused on the long-term and the bigger investment picture—as opposed to a knee-jerk reaction to short-term fluctuations. By sticking to our investment strategy while keeping an eye out for attractive investment opportunities, we continue to generate good long-term returns for members.

    — Discover more about how we invest your super

    — Discover more about the value you get as a VicSuper member