April 17 2024
Investment Update

March 2024

Rest’s Core Strategy finished the March quarter strongly, as Australian and international share markets rose again over the quarter.

Core Strategy returned 4.78% and the Balanced Pension option returned 3.51% for the quarter. We continue to deliver on their investment objectives and help grow our members’ retirement savings. 

Performance (%)
as at 31 March 2024 

3 months 1 year 10 years p.a. Since inception p.a.
Core Strategy (Super) 4.78 12.20 6.98 8.35
Balanced (Pension) 3.51 10.14 6.49 7.43

Source: Rest, 31 March 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 Core Strategy and 13 September 2002 for the Balanced (Pension) option.

Click here to see the latest investment performance for all options

Market update

Despite turmoil in the Middle East and Ukraine, the quarter was generally positive for markets, with both Australian and global shares repeating their performance from the previous quarter. While a majority of the “Magnificent Seven” – the name given to a small number of large technology companies – again posted large quarterly gains, we are also starting to see strong returns outside the tech sector.

The Magnificent Seven

March 2024 Quarterly performance vs S&P 500

Figure 1: performance of the “Magnificent Seven" technology companies over the quarter to 31 March 2024, compared to the S&P 500 shares index, which includes 500 of the largest publicly traded companies in the US and rose 11%

The main driver of these strong returns in share markets was the resilience in global economies, particularly in the United States, where unemployment rates remained low, real wages continued to grow, and corporate earnings were strong. Taken together, these indicators led investors to believe that the effects of the interest rate hikes seen over the past two years may not be as bad as first feared.

The Australian economy continued to grow modestly despite the impact on households of higher interest rates and higher cost-of-living pressures. Immigration (which added more workers to the labour pool, who also spent money) helped support the domestic economy, and low unemployment rates supported consumer spending.   


While the global economy has been resilient and stronger than investors generally expected, positive returns across the last two quarters mean that the prices of shares and in credit markets reflect most of this upside. This puts a greater burden on companies to deliver against market expectations, providing scope for potential disappointment.

Central banks, including the Reserve Bank of Australia, have publicly stated that the path of future interest rates will depend on inflation outcomes.

Inflation in the services sector is proving stubborn, but inflation overall in most developed markets is trending in the right direction. This means that some central banks may have scope to ease rates later this year, which is expected to help assets like shares.

Our overall outlook for near-term market performance is cautiously optimistic, given expectations for slowing economic growth set against the hope of interest rate cuts.  

New tech: just trendy, or fundamental to growth?

The ongoing strong performance of the technology sector, particularly of Nvidia (up more than 80% over the quarter), points to the market’s continuing enthusiasm for artificial intelligence and digitisation in general – one of the five megatrends we have identified as important drivers of long-term opportunities and risks.

The Core Strategy option holds about $1B combined in Nvidia and Alphabet (Google). This means that for an average Rest member with a $35,000 balance in the Core Strategy option, around $500 is invested in these two leading companies driving innovation in AI for future growth opportunities.

But are the returns we have seen driven by AI hype, or is there more to it than the latest headlines? Let’s look at Nvidia more closely. The chip maker also earns revenue from data centres, demand for which is driven by data processing, cloud service providers, enterprise software, and internet firms. In the December quarter, Nvidia’s data centre income rose 409% year on year.

We believe this clearly points to solid economic fundamentals, not just a passing trend. While share prices and the returns they generate are expected to move up and down, especially over short time frames, our exposure to companies at the forefront of digitisation continues to benefit our members.

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