Investments update. Webinar for accredited financial advisers Date: 24 August 2017 Presenter: Stephen Fallet, Manager, Investment Communications

Transcription

1 Investments update Webinar for accredited financial advisers Date: 24 August 2017 Presenter: Stephen Fallet, Manager, Investment Communications

2 This is general information only This information is of a general nature and does not take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, consider your financial requirements and read our Product Disclosure Statement, available at australiansuper.com/adviserresources or by calling Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns. AustralianSuper Pty Ltd ABN AFSL Trustee of AustralianSuper ABN

3 Presenter Stephen Fallet As Manager, Investment Communications, Stephen is responsible for monitoring and communicating the strategy and performance of AustralianSuper s PreMixed and DIY single asset class investment options. Stephen joined AustralianSuper in August 2014, bringing with him over 25 years experience in the investment management industry. With a background in economics, Stephen is a Fellow of Finsia (FFIN) and a Certified Investment Management Analyst (CIMA). 3

4 How best to describe Equity markets deliver in FY17, with pessimism replaced by optimism on the back of improving global growth and company earnings. Or alternatively: As investors, we fret about what could go wrong with the economy, markets and companies. Climbing the wall of worry is where financial markets in particular equity markets can keep rising despite a range of negative news or risks taking their attention. 4

5 World economy firing at last Consensus global GDP forecasts, over time Consensus global earnings estimates, over time Source: Consensus Economics

6 But not so inflation Wage growth (inverted) Unemployment Source: Datastream / Australiansuper

7 How did asset markets fare in FY17 Source: FactSet and AustralianSuper

8 How long can this go 50 Global equities and earnings growth, MSCI AC World %y/y (Local Currency) MSCI AC World Operating Earnings %y/y, RHS 12m ahead earnings Source: Datastream / Australiansuper 8

9 Growth looks set to keep going (for now) Equity vs Fixed Income - %y/y Global Manufacturing PMI, RHS Source: Datastream

10 PreMixed options performance FY17 Benchmarks are peer based, except IDO which is CPI +3.5%

11 Asset class returns FY17 Source: 11 AustralianSuper

12 Consistently delivering top quartile performance.median + 120bps over a 3 Year Rolling Period for the Balanced option 120bps outperformance target Source: AustralianSuper

13 Outperformed median 9 of last 10 years Balanced option financial year returns -5.8% -6.4% -13.3% -12.7% 10.1% 9.8% 10.3% 8.7% 1.0% 0.5% 15.6% 14.7% 13.9% 12.7% 10.9% 9.6% 4.5% 2.8% 12.4% 10.5% AustralianSuper Balanced Option SuperRatings SR50 Median Source: AustralianSuper SuperRatings Balanced SR50 (60-76) Index - Median

14 Single asset class options performance FY17 Source: FactSet and AustralianSuper * Returns are net of tax

15 Present position of the Balanced option Asset Classes Current* Median^ Relative SAA SAA Listed Equities 59.1% 56.0% % 55.0% Australian 27.1% 26.6% % 24.0% Listed Property n/a n/a n/a International 32.0% 29.4% % 31.0% Private Equity 3.3% 2.8% % 4.0% Unlisted Assets 26.6% 20.0% % 29.0% Direct Property 7.8% 7.5% % 9.0% Infrastructure 12.2% 7.5% % 10.0% High Yield & Loans 6.6% 5.0% % 10.0% Fixed Interest & Cash 11.0% 21.2% % 12.0% Fixed Interest 3.0% 13.6% % 7.0% Cash 8.0% 7.6% % 5.0% Other Assets 0.0% 0.0% 0.0% 0.0% TOTAL 100% 100% % Currency 23.6% 19.8% 23.0% 23.0% * As at 17 August ^ AustralianSuper estimate of the asset allocation of the median Balanced Fund 15

16 Size enables us to do things better Sole use of external managers would not have given us the results our members wanted. Establishing and building internal investment capability helps us reduce costs, better manage capacity with existing managers and plan for the future. Size of the investment department has risen 90 investment professionals, 100 operations, compliance, risk and support staff. By 2018, expect to have 40% of member assets managed in-house presently 23%. Dedicated and experienced team focused on managing and co-ordinating all transitions within the investment department. Separate to asset class teams. Internal Capabilities > Asset class mix processes > Australian equities large cap and small cap > Direct equity stakes, including sub underwriting > Property domestic and international > Infrastructure domestic > Term cash > Global equities, active and quantitative 16

17 Building blocks are nearly all in place for internal management Australian Equities Credit Fixed Income FY18 Infrastructure International Equities FY17 Property Asset Allocation Portfolio Construction Treasury ESG 17

18 Thank you