Your fund. Your wealth. Your future. MONTHLY MARKET SNAPSHOT Commentary on the global economy and performance of the financial markets MONTHLY MARKET SNAPSHOT (KEY INSIGHTS) DECEMBER 2017 The 2017 calendar year was an eventful geopolitical year. US President Trump was regularly the centre of attention: From unsuccessfully repealing the Affordable Care Act to legislating the Tax Reform at year end, and ongoing issues with his administration, including Russian links, staffing changes and controversial statements. There was significant escalation of issues with North Korea and ongoing instability in the Middle East (including in Saudi Arabia, Syria, Yemen, Qatar, Iran, and Trump recognising Jerusalem as the capital of Israel). Britain triggered Article 50, to officially begin the process of negotiation to exit the EU. In October, the 19th National Congress of the Communist Party of China was held, with President Xi consolidating power for his next 5-year term (and perhaps longer). There were also general elections in France, UK and Germany. Economic growth was solid in 2017, across most regions, including the US, Europe, Japan, and emerging markets. Leading indicators, including PMI Surveys, suggest strong growth momentum into 2018. The early stages of monetary policy tightening occurred in 2017. The US Federal Reserve raised interest rates three times and began reducing its balance sheet in October, while the ECB advised of a slowdown in its Quantitative Easing (QE) programme in 2018. The current chair of the US Federal Reserve, Janet Yellen, will step down in February 2018, with Jerome Powell, an existing member of the FOMC to assume the role of Chair. In Australia, the RBA left interest rates unchanged over the year. Despite geopolitical events, financial markets were relatively unaffected, with volatility at low levels. Equities enjoyed strong performance, with global equities hedged returning around 20% over the year, driven by earnings growth. Emerging markets produced particularly strong returns of nearly 30%. Australian equities lagged but still returned more than 10%, with Resources a strong performer as commodity prices increased on improved global growth. A key negative for Australian equities in 2017 was the Telstra share price that declined around 30% on concerns over its future profitability. Listed property struggled in 2017, specifically retail property, facing challenges from online shopping, and produced single digit returns. There was little change in fixed interest yields from the start of 2017 to the end of the year. Therefore, fixed interest returns were moderate and broadly in line with yields. Credit spreads contracted further over the year and provided some additional return premium. Despite the Fed raising interest rates, the USD weakened over 2017. The AUD was also supported by increasing commodity prices, although strength in the EUR and, to a lesser extent, the GBP, saw the AUD depreciate against these currencies. Overall, foreign currency exposure detracted around 7% from global equity returns in AUD in 2017. In the month of December, equity markets did not respond particularly significantly to the passing of US taxation changes, but did continue to produce solid positive returns. Australian equities performed well over the month driven by Resources. The AUD appreciated against all major currencies also driven by rising commodity prices. Despite the announcement of the takeover of Westfield in December, the Australian listed property index was flat over the month. In December, the US Federal Reserve raised interest rates for the third time in the year. International government bonds produced a small positive return in the month. In Australia, the RBA continued to keep rates on hold, however, government bond yields rose, leading to negative returns from Australian fixed income in December. NGS SUPER DECEMBER 2017 MARKET SNAPSHOT 1
Australian equities The S&P/ASX 300 Index closed the month up 1.9%, with the strongest growth from Resources and small caps. International equities ($A) The $A hedged MSCI World Index ex-australia gained 1.1% in December while the unhedged index declined by 1.7%, as the Australian dollar strengthened over the month. Emerging market equities continue to lead developed market equities, gaining 13.7% for the financial year to date. NGS SUPER DECEMBER 2017 MARKET SNAPSHOT 2
International equities (local currencies) In December, equity markets in the UK and the US gained 4.9% and 1.0% respectively, while Europe declined. All major markets have posted positive returns for the financial year to date. Fixed income In December, Australian bond returns were negative, while global bonds returns were marginally positive. NGS SUPER DECEMBER 2017 MARKET SNAPSHOT 3
Australian dollar against major currencies The Australian dollar (AUD) appreciated against all major currencies, in particular against the JPY and USD, by 3.5% and 3.2% respectively. Month FYTD Property In December, Australian-listed property was flat and hedged globallisted property gained 1.0%. NGS SUPER DECEMBER 2017 MARKET SNAPSHOT 4
NGS SUPER INVESTMENT PERFORMANCE SUMMARY TO 31 DECEMBER 2017 SUPERANNUATION Accumulation account and Transition to retirement account 1 returns NGS Super Investment Option 10 years 5 years 3 years 1 year % Financial year to date % Month % Since inception return Inception date Funds under management (FUM) $M Diversified (My Super) 5.51 9.56 8.34 11.76 6.33 1.21 7.02 Oct 1999 5511.0 High Growth 6.17 10.89 9.07 12.77 7.09 1.28 6.05 Jul 2007 290.2 PRE-MIXED SECTOR-SPECIFIC Balanced 5.57 7.89 6.95 9.50 4.99 1.04 5.50 Jul 2007 364.2 Defensive 5.27 6.57 6.01 7.92 4.01 0.91 6.18 Feb 2003 204.9 Socially Responsible Diversified n/a n/a 7.56 11.12 4.26 0.65 7.99 Nov 2013 57.5 Indexed Growth n/a 9.54 7.65 10.46 6.50 0.41 9.99 Sept 2011 58.8 Shares Plus 5.82 12.41 10.43 15.46 9.00 1.40 7.57 Oct 1999 241.3 Australian Shares 4.94 9.89 8.87 12.45 8.40 2.19 9.97 Feb 2003 175.1 International Shares 6.25 15.07 11.59 18.82 9.86 0.63 8.03 Mar 2003 53.6 Property 6.18 9.95 8.99 9.75 4.65 1.52 8.75 Sep 2002 76.8 Diversified Bonds 4.18 3.12 2.24 2.94 1.37 0.08 4.93 Oct 1999 30.8 Cash and Term Deposits 3.45 2.41 2.13 1.96 0.95 0.16 4.03 Oct 1999 200.2 The above table shows the net return after investment fees, tax and the asset-based fee. We recommend that you seek financial advice before making any changes to your investment strategy. In particular we recommend that you seek independent financial advice before making any short-term changes to your long-term investment strategy. Investment returns are not guaranteed as all investments carry some risk. Past performance is not a reliable indicator of future performance. 1 If you are in a Transition to retirement account, your returns prior to 1 July 2017 were tax-free and were reflected in the Income account returns. This information is provided by NGS Super Pty Limited ABN 46 003 491 487, AFSL No 233 154, the trustee of NGS Super ABN 73 549 180 515 Your fund. Your wealth. Your future. www.ngssuper.com.au 1300 133 177 3467 (0118)
NGS SUPER INVESTMENT PERFORMANCE SUMMARY TO 31 DECEMBER 2017 INCOME ACCOUNT Returns on income account (pension) investments are tax-free. Income account investment returns will exceed equivalent (taxed) super investment returns in periods when investment earnings are positive. In periods when investment earnings are negative, super returns will exceed equivalent income account returns. A negative return (loss) means that less tax is payable on taxed super investments than has already been accrued, so there is a tax adjustment that can be credited back to accumulation members. There is no equivalent adjustment for income account members because income account returns are tax free. Income account returns NGS Super Investment Option 10 years 5 years 3 years 1 year % Financial year to date % Month % Since inception return Inception date Funds under management (FUM) $M PRE-MIXED SECTOR-SPECIFIC Moderate Growth n/a 9.73 8.17 11.76 6.06 0.90 8.09 Jan 2010 146.1 Diversified 5.98 10.51 8.96 12.22 6.27 0.94 7.23 Nov 2001 400.9 High Growth 6.48 11.89 9.71 13.20 6.85 0.92 6.41 Aug 2007 28.5 Balanced 6.02 8.73 7.51 10.14 5.07 0.87 6.04 Aug 2007 229.6 Defensive 5.68 7.38 6.63 8.68 4.31 0.84 6.25 Nov 2001 188.2 Socially Responsible Diversified n/a n/a 8.35 12.38 4.87 0.65 8.91 Nov 2013 17.8 Indexed Growth n/a 10.54 8.38 11.60 7.22 0.45 10.92 Sept 2011 52.8 Retire Plus* n/a n/a n/a n/a n/a 1.29 5.81 Aug 2017 24.6 Shares Plus 6.28 13.59 10.95 15.84 8.63 0.84 8.98 Sept 2004 25.8 Australian Shares 4.72 10.37 8.78 10.77 6.35 1.18 8.96 Sept 2004 33.5 International Shares 7.14 16.75 12.59 21.54 11.29 0.51 8.16 Sept 2004 14.8 Property 6.70 10.79 9.60 10.24 5.10 1.59 9.52 Dec 2002 24.4 Diversified Bonds 4.83 3.63 2.62 3.44 1.61 0.10 5.30 May 2004 11.5 Cash and Term Deposits 4.07 2.82 2.50 2.26 1.11 0.18 4.54 July 2004 99.8 The above table shows the net return after investment fees and the asset-based fee (no tax applies). We recommend that you seek financial advice before making any changes to your investment strategy. In particular we recommend that you seek independent financial advice before making any short-term changes to your long-term investment strategy. Investment returns are not guaranteed as all investments carry some risk. Past performance is not a reliable indicator of future performance. * The Income Generator option is now closed and has been replaced by the Retire Plus option effective 1 August 2017. ** Please refer to the Since inception return for Retire Plus as this option commenced on 1 August 2017. This information is provided by NGS Super Pty Limited ABN 46 003 491 487, AFSL No 233 154, the trustee of NGS Super ABN 73 549 180 515 Your fund. Your wealth. Your future. www.ngssuper.com.au 1300 133 177 3467 (0118)
How to contact us Contact our Customer Service Team by mail, phone, fax or email. We re here to help you. NGS Super GPO Box 4303 Melbourne VIC 3001 Phone: 1300 133 177 Phone number for callers outside Australia: +61 3 8687 1818 Facsimile: (03) 9245 5827 Online: www.ngssuper.com.au You can contact us directly via the Contact Us page www.ngssuper.com.au/contact-us Further information If you are thinking about making changes to your investments in NGS Super, consider obtaining professional advice to understand which investment option might be right for you. NGS Super offers advice at no extra cost: over the phone through our Financial advice Helpline or through our Customer Relationship Managers who may be able to meet face-to-face. To make an appointment phone our Helpline on 1300 133 177 or complete the financial planning enquiry form on our website at www.ngssuper.com.au/ financial-planning. NGS financial planning service NGS Super members are also entitled to a free initial consultation for general advice relating to your personal circumstances through our financial planning service. We also offer low fixed fees for financial plans no hidden costs or commissions. Important information This is general information only it does not take into account your objectives, financial situation or needs. Please assess your own financial situation, read the Product Disclosure Statement for any product you may be thinking of acquiring and consider seeking professional advice before acting on this information. Past performance is not a reliable indicator of future performance. NGS Financial Planning Pty Ltd, ABN 89 134 620 518, is a corporate authorised representative #394909 of Guideway Financial Services Pty Ltd, ABN 46 156 498 538, Australian Financial Services License (AFSL) No. 420367 and offers financial planning services on behalf of NGS Super ABN 73 549 180 515. The information contained in this document has been sourced from Frontier Advisors Pty Ltd, AFSL 241266; Monthly Market Snapshot (December 2017). The information contained in Monthly Market Snapshot is intended as general commentary and should not be regarded as financial, legal or other advice. Should you require specific advice on the topics or areas discussed please contact NGS Super directly or an appropriate advisor. www.ngssuper.com.au 1300 133 177 Issued by NGS Super Pty Limited ABN 46 003 491 487 AFSL No 233 154 the trustee of NGS Super ABN 73 549 180 515. 3468 (0118) NGS SUPER DECEMBER 2017 MARKET SNAPSHOT 5