Market Update - Fourth Quarter (April-June 2016)

Our sights are set on the long-term.

Although ‘Brexit’ happened in the final throes of the financial year (24 June), Britain’s decision to leave the EU dominated the quarter. Surprisingly, while the event caused political upheaval and short-term share market volatility, markets rebounded quickly with the UK share market actually finishing 4% higher at the end of June than at the beginning.

How did we respond?

While Brexit received a lot of media coverage in Australia, it’s important to note that events occurring in the UK impact our economy a lot less than those in the US or China. With this in mind, we chose to take advantage of the volatile environment. We selectively increased our international investment portfolio by purchasing international shares at lower prices.

All things being equal, buying shares at a lower price means that we can provide you with increased future long-term returns. It’s vital to note that this purchasing principle applies only to long-term returns as predicting share market performance in any given year is difficult.

What happens next?

The path of future interest rates is one of the biggest factors likely to affect future investment returns and the key driver of the expected future volatility. It is unlikely that the US Federal Reserve will be in a hurry to raise the interest rate given the uncertainty currently affecting the global economy.

As we enter the first quarter of 2016/17, we expect that the focus of investors will turn to company earnings. Due to a number of factors, market expectations are for decreased earnings. These factors include low commodity prices (affecting the profits of energy and mining companies), moderate economic growth and a rising US dollar.

In summary

The long-term consequences of Brexit remain to be seen and it’s likely that a volatile financial market will prevail.  Regardless, our response will be the same. We will make the most of the uncertainty. We will harvest opportunities borne from the market’s over-reaction to the situation and continue to ensure that our investment portfolio is suitably positioned to achieve its long-term objectives.

Latest returns

The table below shows how your investment has performed for the quarter and financial year.
To discuss market conditions or your own financial situation, please call one of our financial advisers on 1300 130 780.

Super rates

Pre-mixed Investment options4th Quarter (1 Apr - 30 Jun 2016)FYTD (1 Jul 2015 - 30 Jun 2016)
MySuper Balanced (default)3.24%1.94%
Conservative2.24%3.19%
Moderate2.79%3.25%
Targeted Return4.43%4.97%
High Growth3.42%2.02%
Asset class investment options4th Quarter (1 Apr - 30 Jun 2016)FYTD  (1 Jul 2015 - 30 Jun 2016)
Cash0.45%1.91%
Property9.06%21.96%
Indexed Shares4.14%1.65%
Australian Shares3.63%2.26%
International Shares2.12%-6.08%

Pension rates

Pre-mixed investment options4th Quarter (1 Apr - 30 Jun 2016)
FYTD (1 Jul 2015 - 30 Jun 2016)
Balanced (default)3.65%2.40%
Conservative2.58%3.79%
Moderate3.21%3.94%
Targeted Return4.97%5.94%
High Growth3.89%2.52%
Asset class investment options4th Quarter (1 Apr - 30 Jun 2016)FYTD (1 Jul 2015 - 30 Jun 2016)
Cash0.54%2.28%
Property9.52%23.70%
Indexed Shares4.62%1.89%
Australian Shares4.02%2.80%
International Shares2.34%-6.85%
*The default for our pension product is the Balanced option. Past performance is not a reliable indicator of future performance.