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2020/21 financial year investment wrap up

Rest’s Core Strategy ended the financial year strongly to return 17.43% for the 12 months to 30 June 2021, while our award-winning Balanced - Indexed option returned 19.98% during the same period. For Pension members, the Balanced option also performed well gaining 15.19%.

Core Strategy option to 30 June 2021

3 months (%) 1 year (%) 10 year (% pa)
4.76 17.43 8.41

Balanced option (Rest Pension) to 30 June 2021

3 months (%) 1 year (%) 10 year (% pa)
4.32 15.19 7.88

All figures as at 30 June 2021. Returns are net of investment fees and tax, except Pension which is untaxed. The earnings applied to members’ accounts may differ. Investment returns are at the investment option level and are reflected in the unit prices for those options. Returns for the ten year period are annualised returns. N/A applies to options running less than the indicated time periods. Past performance is not an indicator of future performance.

Our investments in overseas and Australian shares continued to provide the highest returns in the portfolio. Our investments in unlisted assets within the property, agriculture and infrastructure sectors also contributed strongly, while our bond holdings helped stabilise the portfolio when markets were volatile. Our cash investments contributed minimally given the ultra-low global interest environment.

See the performance of all our investment options here
 
Our CEO, Vicki Doyle, has summed up the year in this video.
To learn more about our investment performance and approach for the 2020/21 financial year, watch this video by our CIO, Andrew Lill.

Keeping a focus on the long term

As impressive as recent returns are, it’s important to remember that to achieve your retirement goals, super is a long-term investment strategy. Over the long term, the Core Strategy’s performance has remained solid - returning 8.59% p.a. since the fund’s inception 33 years ago and 8.41% p.a. over the 10 years to 30 June 2021. This is well above its investment objective of CPI + 3% per year over the long term. For members, this means retirement savings have been growing at a much faster pace than increases in the cost of living. This 10-year performance also puts Rest’s Core Strategy ahead of SuperRatings’ median fund*.

As a profit-to-member fund, our focus will always be on delivering strong long-term results for our members. If a member invested in the Core Strategy with a starting balance of $50,000 20 years ago, the member would currently have a balance that is 37% higher than if they had invested in the average retail fund. That’s $59,000 in extra super savings.**

Performance over 20 years Performance over 20 years

* SuperRatings Fund Crediting Rate Survey - SR50 Balanced (60-76) Index, May 2021

** Source: SuperRatings Fund Crediting Rate Survey – SR 50 Balanced (60-76) Index, May 2021. Returns are net of investment fees, tax and implicit asset-based administration fees. Explicit fees such as fixed dollar administration fees, exit fees, contribution fees and switching fees are excluded. Ratings or investment returns are only one factor that you should consider when deciding how to invest your super. Past performance is not an indication of future performance. SuperRatings Pty Limited does not issue, sell, guarantee or underwrite this product. Go to superratings.com.au for details of its ratings criteria.

Reflecting on the past 12 months

Stock Market

Resilient share markets

The share market tends to do very well in the year following a recession, and this financial year proved no exception. Led by US markets, notably large US tech names, global stocks rallied to fresh record highs in the June quarter - again outperforming bonds. Global share markets as measured by the MSCI World ex Australia index (in local dollars) closed the June quarter up +8%, and the financial year, up an impressive +37%. Compared to their worst COVID-19 pandemic panic levels in March last year, global stocks are up roughly 90%.

 

asx

Fastest recession, fastest recovery

Globally, the economic recovery has been unlike any other, one year on from when the COVID-19 pandemic plunged the world economy into one of its fastest / worst recessions ever. With record low interest rates, unprecedented levels of fiscal policy support from governments around the world to support their economies, and the rapid progress on vaccines, the global economy is set to post its fastest recovery from recession in more than 80 years. In the US, both business and investor confidence has grown rapidly with widespread vaccinations, and record levels of government stimulus is helping the US economy and jobs market return to pre-pandemic levels.

 

Worker

Fortress Australia

Compared with other developed economies, Australia has been successful in containing the pandemic during the 2020/21 financial year. This success combined with large amounts of government spending and ultra-loose monetary policy, has seen Australia recover much faster than expected from the COVID-19 crisis – with the jobs market, in particular, a bright spot. For the year to 30 June 2021, Australia’s All Ordinaries index rose by 26%, its biggest financial year gain in 34 years, while the ASX 200 rose by 24% - its biggest gain since inception in 1992. China’s economic rebound and demand for commodities, notably iron ore, underpinned the strength of the mining sector in the Australian market. With interest rates at record lows, credit growth has rebounded, benefitting the banking sector which was another key contributor to the positive performance in Australian shares. 

 

Cafe worker

Looking ahead

Recent economic data suggests the global recovery is progressing well. But, the recent outbreak of COVID-19 mutations, and the world’s unequal access to - and distribution of - vaccines suggests that the process of reopening the global economy post-pandemic may prove to be long and complex. Furthermore, the strong rebound we have seen in many economies has given rise to inflation concerns for the first time in many years. While central banks largely see near term price pressures as transitory, we are mindful of the impact any reversal of policy measures and higher interest rates may have on global financial markets. 

We are largely positive on growth prospects for the global economy but note that the path forward may not be linear and that market valuations are underpinned by record low interest rates and policy stimulus. We also are mindful of the challenges of geopolitical changes across the globe and the impact of climate change on policy, economic outcomes and asset prices. 

Such challenges underscore why, at Rest, we believe it’s important to stay disciplined, well diversified and focussed on the long-term with realistic expectations for returns instead of trying to time the markets. Through this investment environment we have remained and continue to remain focused on meeting our members’ personal best retirement outcome.

Want to know more?

You’re invited to our End of Financial Year webinar

Don't miss out on hearing from Rest's senior leaders on our investment performance over the last financial year. You'll find out about Rest's commitment to sustainable and responsible investing, and our action plan to achieve Net Zero by 2050.

Save your spot now