Following on from 2012/13’s momentum, the Australian and global equities market continued to perform strongly throughout the 2014 financial year.
Most months delivered positive returns, although a moderate sell-down did occur in January 2014, due to Chinese and US manufacturing weakening, renewed attention on the US Federal Reserve’s tapering program and general concerns over emerging markets.
With the RBA and the Fed signalling their intention to maintain cash rates at historical lows for some time, the Australian and the US yield curves steepened with short-term yields remaining at the low end. 10-year bond yields in Australia and the US increased marginally over the last 12 months, suggesting that investors continue to have a moderately positive outlook for global growth recovery.
Overall returns from fixed interest markets were positive over financial year 2014, with high yield loans, emerging market debt (hard currency and corporate) and bank loans providing the strongest returns over this period. Investment grade and government bond indices also generated solid returns, although lower than the last three to five years.
Australian unlisted property provided a strong and stable income return with some capital growth. Due to large capital inflows from foreign investors, we also saw a record number of office and retail transactions occur, reaching $20 billion.
Transaction and fundraising activity has been very strong with new core infrastructure, driving pricing of investments to historically high levels. Listed infrastructure generated returns similar to that of listed equities; whereas the average unlisted infrastructure fund only performed in line with long-term expectations, whilst still outperforming the bonds’ +4% p.a. benchmark.
Over the 2014 financial year, the Australian dollar appreciated slightly against the US dollar, finishing June 2014 at around US $0.94. The AUD, however, depreciated significantly against the British Pound and to some degree against the Euro.
Media Super’s Balanced (MySuper) option returned a solid 11.08% for 2013/14, and in excess of 25% over the past two financial years. We’re happy to have delivered that with a more conservative investment risk profile than some other funds. Furthermore, despite the impact of the GFC, we’ve delivered on our objective of returns equivalent to CPI +3.5% p.a. over the past ten years.
* Historical returns before 1 July 2008 are based on former Print Super investment returns.
Investment warning: Investment returns are not guaranteed and past performance gives no indication of future returns.