investment update

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We’re navigating difficult market conditions in 2022. But we start from a strong position. Ongoing success is underpinned by our strong investment research culture. We know that long-term and sustainable changes will generate value for our members.

 


creating investment excellence

 

Strong long-term performance doesn’t happen by chance. At HESTA, guided by our Quantitative Analysis and Research team, we use sophisticated investment modelling. This investment approach looks beyond short-term volatility, doesn’t react to investment emotions, and guides our value-creating investment positions.

Our investment modelling drives strong decision making when markets are rallying and when they are volatile. These models help us invest with conviction.

 

 

Title: HESTA Investment Update - May 2022

Alvin Tan

Hello and welcome to the HESTA Investment Update.

My name is Alvin and I’m the General Manager of the Quantitative Analysis and Research Team.

This year, we have navigated challenging market conditions. We’ve seen geopolitical tensions, rising inflation, and an evolving response from central banks.

Part of my role at HESTA, is focussed on how we stay ahead of changing market conditions. We use sophisticated investment models that look beyond short-term volatility, don’t react to investment emotions, and guide our value-creating investment positions.

These investment models help our investment team make confident decisions and invest with conviction.

With that in mind, let’s take a look at our recent investment performance.

Up to 31 March, 2022, the HESTA Balanced Growth option — our MySuper investment option — has returned 9.45% over the past 12 months. This demonstrates that we were able to generate strong returns while markets were rising, and protect members’ investments during more volatile market conditions.

Over the past 10 years, HESTA Balanced Growth has returned an average of 8.92% p.a. This is a terrific result for our members, and demonstrates the benefits of investing for the long term.

Within my team at HESTA, we’ve also been able to support the work of our Responsible Investment Team.

We’ve been able to use sophisticated climate scenario modelling to assess how climate change will affect economic outcomes in Australia and the USA. These outcomes will be reflected in investment market performance. Our climate scenario modelling allows us to evaluate how climate risk will impact GDP and inflation. In turn, we can use this data to best position our investments.

At HESTA, we are committed to investing to meet the challenges of climate change – after all, part of our commitment is to create a better world for our members to retire into.

We are committed to creating positive climate outcomes. We were the first major super fund to commit to reducing carbon emissions across the investment portfolio to net zero by 2050. This is all part of our Climate Change Transition Plan.

As we look ahead, interest rates and inflation are going to change the economic landscape. And asset prices will adjust in response. We will be positioning the portfolio to stay ahead of these changes.

As always, it’s important for our members to keep in mind that superannuation is a lifetime strategy, and the best investment outcomes will be seen over the long term.

Thanks for tuning in. We look forward to seeing you next time.

 

 

 

market news

 

HESTA started the year from a position of strength, having delivered strong performance throughout 2021. We’ve now entered more challenging market conditions and have experienced sizeable volatility to begin 2022. We are navigating a range of factors: geopolitical tensions, rising inflation expectations, and an evolving response from central banks.

However, employment data in Australia and the US is strong, and Australia has achieved its highest rate of employment in over 30 years.

But there are still challenges ahead. The ongoing invasion of Ukraine, subsequent sanction responses and volatile energy markets can lead to a variety of growth and inflation outcomes among countries. At the same time, central banks are likely to tighten monetary conditions faster than anticipated in their bid to curb high inflation. This has the potential to further dampen growth prospects. 

 

 

climate change modelling

 

Our Quantitative Analysis and Research team use sophisticated climate scenario modelling to assess how climate change will affect economic outcomes in Australia and the USA. These outcomes will be reflected in investment market performance.

At HESTA, we are committed to investing to meet the challenges of climate change – after all, part of our commitment is to create a better world for our members to retire into.

We also need to ensure we position our investments to protect members’ savings against the effects of climate change. Our climate scenario modelling allows us to evaluate how climate risk will impact GDP and inflation. In turn, we can invest in assets and strategies that are insulated against these factors.

Pleasingly, following COP26 last year, most countries have net zero targets. And increasingly, these targets are embedded into law and policy documents.

At HESTA, we were the first major super fund to commit to reducing carbon emissions across the investment portfolio to achieve net zero by 2050, as a part of our Climate Change Transition Plan.

 

 

expanding our internal management capabilities to Fixed Interest and Cash

 

Following the successful establishment of our in-house Australian Equities team – who are now actively investing – we’re embarking on the next phase of our investment internalisation program.

Plans to bring our Fixed Interest and Cash teams in-house are now well underway and we’re targeting internal management of 15% of the portfolio in the short-to-medium term.

Our hybrid strategy – combining direct investment capability alongside leading external asset managers – aims to continue generating strong, competitive, long-term investment performance at a lower cost, directly benefiting members.

We look forward to providing more updates on this exciting next step as the project progresses.

 

 

 

super performance

Take a look at the latest performance for all the HESTA investment options.

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