Thanks to political tensions, the global economy is slightly more volatile than usual.
However, we’re focussed on long-term returns for your super
. Let’s take a closer look at the international and domestic economic landscape and see what this might mean for your super over the next 12 months.
But before we begin… some great news!
HESTA Core Pool has just been named Australia’s best risk-adjusted MySuper (default) investment product by independent ratings agency, Rainmaker. Against some very strong competition, Core Pool - the investment option in which more than 80% of our members are invested - has come out on top for risk-adjusted returns over the last 3 years. In plain English, that means the way we invest your super is delivering strong performance for members in a rapidly-changing investment landscape driven by trade and political tensions (which you’ll read about below).
It’s a win we’re very proud of – but all credit should go to you. You’ve made a great choice for your future.
What’s happening around the world?
There’s been a fair bit of argy-bargy between the United States and China which has dominated international headlines. We don’t see an end in sight to this trade war which has had, and may continue to have, an impact on world trade and business confidence. American consumers are faring better, with a tight labour market and rising wages.
There’s also discontent in Europe and the UK thanks to the 31 January Brexit deadline. On top of that you will have seen protests happening in Hong Kong which continue to rattle one of Asia’s largest financial centres.
In response to these events, global central banks have cut interest rates. We’ve seen the US Federal Reserve lower rates once while the European Central Bank has lowered rates into negative territory. The People’s Bank of China has also cut interest rates and has started spending more on infrastructure to stimulate the economy.
What’s happening in Australia
We have not been immune to the rate cut spree happening overseas. The Reserve Bank of Australia has cut rates three times this year to a record low of 0.75 per cent. This has helped stall the fall in property prices in most markets, with mortgage finance and auction clearing rates starting to rebound.
Looking out over the next few years, we remain cautious. Even though central banks are reducing interest rates to attempt to accelerate their economies, the ongoing trade dispute between the US and China continues to dampen export-dependent countries, manufacturing and global earnings.
With interest rates now so low, central banks have a much shorter lever to pull to breathe life into world economies.
We’re here for you
Our expert investment team has steered members’ superannuation through market ups and downs for more than 30 years. By partnering with the best managers around the world, we stay on top of what’s happening in Australian and global markets.
While the global economy continues to journey through rougher seas, we know that for long-term investors (like most of our members), constant market exposure is the way to achieve your retirement goals.
Like to see how we’ve performed over the long term (the timeframe that really counts)? Let’s go.