January 2010 A New Year dip in share markets Markets began 2010 in a positive All industry sectors recorded negative Property way, but by mid month, this returns for the month of January. Private investors, syndicates and shifted dramatically with investors It is expected that 2010 will be a international institutions have driven an becoming risk adverse due to challenging year for investors, with early wave of sales in the property interest rates rising and high profit sector in 2010. The domestic unlisted concerns related to regulatory growth expectations that need to be met changes in the US banking property sector, as measured by the to justify further significant equity Mercer Unlisted Property Index, system, higher than expected market gains. returned 0.5% for the month of January inflation in China and emerging with an annual return over five years of issues related to foreign International Shares 8.3%. government (also known as The Chinese central bank tightening to slow down its economy, reforms to US Fixed Interest sovereign) risk, particularly in the regulations and increasing sovereign The Australian bond market Euro zone. debt worries in Europe all contributed to strengthened in January taking the lead falls in International equity markets from the US. The three-year Australian During the month the International during January. During the month, the Monetary Fund (IMF) upgraded its government bond yield dropped by Morgan Stanley Capital International 0.16% to 4.52% while the ten-year global economic growth forecasts for (MSCI) World ex-Australia Index 2010 from 3.1% to 3.9%, driven government bond dropped by 0.27% to returned -3.1% in Australian Dollar 5.39%. These moves resulted in the predominantly by a stronger pace of terms and -0.3% annual return over five recovery from the global financial crisis. UBSA Composite Bond Index returning years to the end of January. 1.3% during January with a five year In Australia, our underlying inflation Emerging markets also experienced a annual return of 6%. rose by 0.65% over the quarter to pullback in January 2010, with the December 2009, taking the annual rate Global bond yields moved lower in MSCI Emerging Markets Index January due to sovereign risk concerns to 3.4%. The December 2009 labour returning -4.5% in Australian dollar market figures released in January and possible changes to the regulatory terms after a very strong year in 2009. powers within the US financial system. showed that 35,200 jobs were created in December leading to a reduction in In Europe continued concerns related to Concerns were mainly attributed to the the unemployment rate from 5.6% in sovereign debt risk, with the immediate credit worthiness of Greece and rising November 2009 to 5.5%. Importantly, focus currently on Greece, led to government debt levels in Europe. the number of full-time employed weaker markets through most of persons increased for the second Europe. Share markets in Germany Cash month in a row after dropping (-5.9%), France (-5.0%) and Spain The UBSA Bank Bill Index increased consistently since mid-2008. (-8.9%) fell as details of debt levels in 0.3% for the month, with a five-year Euro zone economies emerged during average annual return of 5.9%. Australian Shares the month. In Asia, moves by policy makers to raise reserve requirements The Australian dollar was weaker in After a strong start to the year, the for banks and to place limits on lending January against the US Dollar, British Australian share market struggled in led to weaker markets in Hong Kong pound, Japanese Yen and the trade- January, with the S&P/ASX 300 (-6.4%), Singapore (-6.0%) and China weighted index (TWI), but stronger Accumulation index declining by 6.2%. (-8.5%). against the Euro. The S&P/ASX 300 Accumulation index has now returned 18% for the financial year to the end of January 2010 and 6.6% per annum over five years. The S&P/ASX Small Ordinaries Index returned -7.4% during January. Performance of the main investment markets to 31 January 2010 Major Index Performance 1 Month 3 Months 1 Year 3 Years pa Australian Shares (S&P/ASX 300 Accumulation Index) -6.17% -0.95% 35.67% -3.47% International Shares (MSCI AC World (ex Australia)) -3.09% 3.52% -0.11% -10.69% Emerging Markets (MSCI Emerging Markets) -4.46% 4.07% 28.91% -1.15% Unlisted Property (Mercer/IPD Unlisted Property Index) 0.50% 0.23% -8.80% 3.21% Listed Property (S&P/ASX 300 Property Trust Accumulation Index) -2.98% 1.28% 17.59% -4.84% Australian Fixed Interest (UBSA Composite All Maturities Bond Index) 1.35% 2.47% 1.67% 6.87% International Fixed Interest (Citigroup World Government Bond Index) 0.92% 1.40% 6.31% 8.35% Cash (UBSA Bank Bill Index) 0.35% 0.98% 3.42% 5.85% Major index data is gross of fees and taxes. Performance of AustralianSuper’s investment options to 31 January 2010 Bench Bench 3 Years Bench 5 Years Bench Investment option 3 Months mark 1 Year mark pa mark pa mark PreMixed Options High Growth 0.90% 1.41% 11.01% 16.33% -3.55% -3.90% 4.39% 3.89% Balanced 1.66% 1.34% 9.01% 12.66% -1.36% -2.05% 5.26% 4.30% Sustainable Balanced 0.08% 1.34% 16.80% 12.66% -0.82% -2.05% 4.60% 4.30% Conservative Balanced 1.36% 1.66% 7.73% 11.92% - - - - Stable 1.32% 1.54% 6.14% 8.90% 3.01% 1.95% 5.33% 4.58% Capital Guaranteed 0.70% 0.71% 2.31% 2.46% 4.29% 4.53% 4.58% 4.56% DIY Options Australian Shares 1.11% -0.96% 35.29% 30.84% -1.62% -3.55% 7.28% 5.33% International Shares 0.81% 2.92% 6.52% -1.17% -9.32% -10.62% 0.43% -1.29% Australian Sustainable Shares -0.93% -0.98% 73.52% 30.77% 0.42% -3.62% 7.81% 5.26% International Sustainable -1.87% 0.62% 3.17% -4.44% -12.26% -10.92% -2.67% -1.95% Shares Property 0.37% 0.04% -10.72% -8.58% -0.35% 2.23% 4.72% 6.77% Australian Fixed Interest 2.11% 2.05% 1.28% 1.29% 4.43% 5.66% 4.52% 4.92% Diversified Fixed Interest 1.91% 1.83% 6.70% 3.07% 4.91% 6.15% 4.68% 5.23% International Fixed Interest -0.64% 1.15% 2.69% 5.14% 1.50% 6.93% 3.08% 5.82% Cash 0.92% 0.80% 3.25% 2.82% 5.24% 4.88% 5.23% 4.92% Crediting rates in this table are net of fees and taxes. Benchmarks: High Growth – SR50 Median Growth Option; Balanced – SR50 Median Balanced Option; Sustainable Balanced – SR50 Median Balanced Option; Conservative Balanced – SR25 Median Conservative Balanced Option; Stable – SR50 Median Capital Stable Option; Capital Guaranteed – UBSA Bank Bill Index adjusted for fees and tax; Australian Shares – S&P/ASX300 Accumulation Index adjusted for fees and tax; International Shares – MSCI AC World ex Australia (in $A) Index adjusted for fees and tax; Australian Sustainable Shares – S&P/ASX300 Accumulation Index adjusted for fees and tax; International Sustainable Shares – MSCI World Net Dividend Reinvested Unhedged to AUD adjusted for fees and tax; Property – Mercer/IPD Unlisted Property Index adjusted for fees and tax; Australian Fixed Interest – UBSA Composite All Maturities Bond Index adjusted for fees and tax; Diversified Fixed Interest – [50% UBSA Composite All Maturities Bond Index + 50% Barclays Global Aggregate Index hedged to AUD] adjusted for fees and tax; International Fixed Interest – Citigroup WGB Hedged Index adjusted for fees and tax; Cash – UBSA Bank Bill Index adjusted for fees and tax. This document was prepared by AustralianSuper using underlying market commentary provided by Frontier Investment Consulting Pty Ltd (ABN 21 074 287 406). Frontier prepared the underlying market commentary for its wholesale clients on the basis of information supplied from other sources. While that information is believed to be reliable, no responsibility for errors or omissions is accepted by Frontier. This document was prepared by AustralianSuper in February 2010. This document is of a general nature and does not take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, consider your financial requirements and read our Product Disclosure Statement, available at www.australiansuper.com/Forms/Publications or by calling 1300 300 273. AustralianSuper Pty Ltd. ABN 94 006 457 987 AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898. ‘Industry Superfund’ logo used with permission of Industry Fund Services (IFS).This consent had not been withdrawn at the date of publication. Investment returns are not guaranteed as all investments carry some risk. Past performance gives no indication of future returns.
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