Wednesday, 18 July 2018
Rest, one of Australia’s largest superannuation funds, has delivered a positive return to members for the ninth consecutive year, demonstrating the strength of its active investment management approach over the long term.
The Rest Core Strategy delivered a return of 8.76 per cent for the year ending 30 June 2018, according to financial results released today.
These results amount to around a 105% per cent cumulative return for the Core Strategy during the past 10 years and a 52 per cent cumulative return during the past five years.
The Rest Pension Core Strategy returned 9.30 per cent for the year ending 30 June 2018, while the Rest Pension Balanced returned 6.76 per cent.
Rest’s General Manager Investments Dr Brendan Casey said that shares again made the greatest positive contribution to returns during the past 12 months, with property and credit also performing strongly.
“Economic growth in the US continued to gain momentum, particularly towards the end of the year, as sizeable tax cuts and additional government spending filtered through to the broader economy. This is translating into robust corporate earnings and a buoyant job market in the US,” Dr Casey said.
“Despite dropping more than 10 per cent in the first quarter of 2018, the US S&P 500 Index performed exceptionally well to end up 12.2 per cent for the year.
“Rising interest rates in the US helped push the Australian dollar down to 74 US cents by 30 June. This further boosted Rest’s international equities performance.
“The ASX 300 Accumulation Index also rebounded from a slow first quarter to gain 13.2 per cent for the year, showing remarkable resilience to ongoing US-China trade tensions, cooling domestic property markets, and the impact of the Financial Services Royal Commission on bank shares.”
Dr Casey said Rest’s acquisition of a $900 million stake upon completion of the $2.7 billion, 50-level Quay Quarter Tower in Sydney’s CBD was another exciting investment highlight for the year.
“This premium-grade property is likely to be one of Australia’s best office buildings and is expected to generate strong net returns for our members over the long-term,” he added.
“Rest also introduced private equity as an asset class within several of our investment options. This will provide members invested in those options with exposure to an international portfolio of unlisted private businesses.”
Dr Casey said while global economic momentum and corporate profitability is continuing to gather pace, several risks needed to be monitored carefully. These include ongoing geopolitical turbulence, tighter global monetary policy, high corporate and household debt levels, and slowing China growth.
“Most markets are already trading above their long-term average valuations, meaning they would be highly susceptible to bouts of volatility when you factor in these risks,” he said.
“We see good reason to keep our relatively defensive positions in place. Rest currently holds around 11 per cent of our Core Strategy in cash and around 42 per cent in Australian and overseas shares.”
Returns from Rest Core Strategy, Rest Pension Core Strategy and Rest Pension Balanced as at 30 June during the past 10 years are as follows: