Investment Update December 2024

Performance (%) as at 31 December 2024	3 months	1 year	10 years p.a.	Since inception p.a.
Growth (Super)	2.87	11.62	6.87	8.35
Balanced (Pension)	2.49	9.37	6.27	7.43

Source: Rest, 31 December 2024. 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 periods greater than one year are annualised. Past performance is not an indicator of future performance. Inception dates are 1 July 1988 for Growth and 13 September 2002 for the Balanced (Pension) option.

Click here to see the latest investment performance for all options

Source: Rest and FactSet, 31 December 2024.

Indices used are Global Shares: MSCI All Country World Ex-Australia Equities Index with Special Tax (unhedged in AUD), ), Cash: Bloomberg AusBond Bank Bill Index, Australian Credit: Bloomberg AusBond Credit 0+ Yr Index, Australian Bonds: Bloomberg Ausbond Government 0+ Yr Index, Australian Shares: ASX300 Total Return Index, Global Bonds: Bloomberg Global Treasury Index (Hedged AUD, Global Credit: Bloomberg Global Aggregate - Corporate Hedged to AUD, Global Listed Property: FTSE EPRA/NAREIT Developed ex Australia Rental Hedged to AUD, Global Listed Infrastructure: FTSE Developed Core Infrastructure 50/50 Index Hedged to AUD.

After the US election in early November, the US share market had its best month of the calendar year. The Republicans emerged as the clear winners, with control of both the House and Senate, meaning it will be easier for them to implement new policies. Share markets performed well, driven by optimism about proposed policies such as tax cuts and deregulation.

However, this positive momentum for share markets faced a setback in December following indications from the US central bank that it might not cut interest rates in 2025 as much as initially thought. Despite indications of inflation coming down from high levels, it remains above the central bank’s target, meaning that the central bank needs to tread a careful path when considering further rate cuts to help prevent inflation from reigniting. Bonds also reacted negatively to these developments after already experiencing a tough start to the quarter.

Globally, other central banks, including those in the Europe, Canada, and New Zealand, continued with rate cuts during the quarter, contrasting with the Reserve Bank of Australia (RBA), which has not yet reduced rates. With high inflation persisting and exceeding the RBA's target range, the RBA has been cautious about lowering rates too quickly. Following its December meeting, the RBA indicated it’s becoming more confident in the downward trend in inflation, sparking speculation about a possible rate cut in the first half of 2025. Still, such a decision will also depend on other economic indicators like employment numbers, so mortgage holders might not be able to relax just yet.

Despite mixed market results, investing across a range of different asset classes (diversification) worked out well for all of Rest's diversified options, which still produced positive returns overall for the quarter, even against the backdrop of an eventful quarter that included US elections and continuing regional conflicts.

What's the outlook?

We believe the global economy remains largely on a solid footing. As we have noted, several central banks are moving to lower interest rates, and the strong performance of the US market along with solid strong corporate earnings have been recent standouts.

Geopolitical events such as conflict in the Middle East and Ukraine have dominated the news cycle, but they are currently having minimal impact on markets. While markets initially responded favorably to Trump's election win, how any new policies will eventually play out is still unclear at this time. We continue to monitor these developments closely and believe that by maintaining a diversified investment portfolio, we are well positioned to navigate these uncertainties.

While recent investment performance has been strong, past performance is not an indicator of future performance and it’s important to remember that your super is intended for the long haul. That’s why our investment strategy aims to deliver strong returns over the long term as we strive to maximise return outcomes for our members.

From Spain to the Netherlands: an impact investment update

At Rest, impact investing forms one part of our overall approach to responsible investing. Impact investments at Rest are those investments made in members’ best financial interest to provide a financial return while also providing a positive and measurable impact to society and/or the environment.

Earlier in 2024, Rest announced a new impact investment as a cornerstone investor in Fidelity International’s Fidelity Real Estate Logistics Impact Climate Solutions fund (LOGICs Fund). The LOGICs fund focuses on acquiring logistics properties across Europe and refurbishing them into high-quality, net-zero carbon aligned industrial assets.

Property location	Quick facts
Tilburg, Netherlands	Tilburg is a major logistics centre because of its location close to the border of Belgium, great for moving goods in and out. Industrial Park Katsbogten is five minutes from central Tilburg and offers 44,500 sqm for lease. Current tenants include well known European companies like DB Schenker and Bakker Logistiek.
Roermond, Netherlands	The Roerstreek industrial estate is well positioned with excellent connections to major highways connecting the Netherlands and Germany, as well as nearby barge and rail terminals. It offers 18,000 sqm of space and is currently leased to the international shipping company UPS.
Ontigola, Spain	Ontigola is positioned favorably near Madrid's rapidly expanding population and booming e-commerce sector, presenting excellent opportunities for logistics operations. It is home to a large logistics park with two buildings totaling 55,600 sqm, all of which is already occupied by logistics firms.