Things fall apart; the centre cannot hold . . .

...but investment markets have held up well in the last financial year! In spite of Brexit, Trumpism and political conflict around the globe, world markets have performed strongly adding significantly to superannuation funds’ annual returns.

Thanks to the hard work and expertise of the NGS Super Investment Committee and in house Investment Management team, the NGS Super default option (Diversified (My Super)) returned 10.78% for the year. It should be noted that at the time of writing (early July) the returns are based on the ‘soft close’ prices and there could be some minor variations when the final, audited figures come in, but for all intents and purposes it has been a most excellent year in terms of investment returns. If you consider the investment objective of the Diversified (My Super) option, which is 3% above CPI over rolling 10 year periods, last year’s result came in well above that target.

The top asset class for the year was International Shares coming in at 15.35% thanks to strong performances in the USA especially. The Australian Shares option was not far behind coming in at 12.87% for the year as the ASX 200 rose to close to 6000 by the end of June. The NGS Super blended shares option, Shares Plus, also returned strongly with an annual result of 14.10% thanks to the strong performance in both international shares and Australian shares. High Growth, Balanced and Indexed Growth returned 11.70%, 8.90% and 9.31% respectively. For those members invested in the NGS Super socially responsible investment option, Socially Responsible Diversified, the final return was 12.32%.

Investment managers, staff and certainly fund members love to see double digit returns, but not all options returned double digits last year. As could be expected with a Reserve Bank cash rate set at 1.5%, the Cash and Term Deposits option came in at 2.04%, while Diversified Bonds returned 2.14%.

To round off the returns for the Accumulation accounts (super) for the year, Property returned 8.68% with a significant proportion of the NGS Super Property portfolio invested directly which means the fund actively manages and owns the property in the portfolio. Some listed property is also included in the portfolio. And for those conservative investors who were in the Defensive option, the return was 7.17%. It should be noted that the NGS Income Stream account returns were all higher than the Accumulation account returns due to the tax free environment for earnings on the income stream.

Of course it has become an axiom in the investment world to say that that past performance is not a reliable indicator of future performance. Key considerations when setting investment priorities should always be your risk tolerance, expected returns and of course your time horizon. Risks in the investment world include areas such as legislative risk, market risk, currency risk, inflation risk and of course the risk of inadequate savings to support your lifestyle in retirement. And volatility, which can be roughly defined as the degree to which investment returns move up and down over time, varies according to the investments selected in your portfolio. There is a general correlation between risk and return and that is the decision which has to be made by the individual investor.

So when setting your investment objectives for 2017-2018, a very good starting point is the NGS Super Investment Guide which explains all of the available investment options with their return objectives over time and their risks. It can be downloaded at www.ngssuper.com.au and it’s good to consider professional advice before making any investment choices. NGS Super financial advisors are ready and able to assist you and can be contacted on: 1300 133 177.

(Important information: The information in this article is general information only and does not take into account your objectives, financial situation or needs. Before making a financial decision, please assess the appropriateness of the information to your individual circumstances, read the Produce Disclosure Statement for any product you may be thinking of acquiring and consider seeking personal advice. Past performance is not a reliable indicator of future performance. Any opinions are those of the author and do not necessarily reflect the view of NGS Super.)
Bernard O'Connor
NGS Super