Hostplus members have seen a return of 1.57 per cent in its Balanced (MySuper) Option after employing active management strategies to navigate difficult global investment markets.
The year 2022 has presented global investment markets with challenging investment conditions. The 2021-22 financial year has seen super funds post the lowest returns on Balanced options, dropping by 3.3 per cent, the lowest since the GFC, and third lowest since the introduction of the superannuation guarantee in 1992.
Hostplus CEO, David Elia, said he was “very proud” that the fund could produce a positive return for members, particularly in a year where median returns for Balanced options were expected to be in negative territories.
Mr Elia cited “heightened political tensions, rising inflation and rising interest rates” in creating a “very different set of circumstances” this financial year that have afflicted the global investment markets.
“Based on current industry estimates, these conditions are indicating that the industry median return for Balanced Options could settle in the ‘red’.”
“Against this challenging backdrop, we are therefore very pleased that our active investment style and diversified portfolio has once again delivered favourable investment outperformance for our members relative to our peers,” Mr Elia said.
Mr Elia further commented on Hostplus’s outperformance track recording being a “testament” to the fund’s active investment approach, particularly in regards to volatile markets. He stated by “actively managing and applying a strategic asset allocation” to perform under various market conditions, the fund was able to “smooth out” long-term returns.
“With more volatility forecasted in the years ahead, we encourage superannuation members to clearly understand their funds’ underlying investment strategies and not to focus on cost alone and consider this when choosing superannuation funds and products,” Mr Elia said.
Sam Sicilia, Hostplus CIO, reiterated the importance of active management while remarking that the positive returns are the result of long-term investment decisions.
Mr Sicilia stated that the fund made an “active decision” in 2015 to “significantly reduce its exposure to bonds” following the belief that bond portfolios would not provide downside protection to market volatility during low-interest rate periods.
“We instead chose to invest in mid-range defensive assets such as infrastructure and unlisted assets. Being overweight in assets such as property and infrastructure provided all-important inflation protection.
“As a result of this decision, we now find ourselves well-positioned to avoid the negative returns suffered by bonds this last financial year,” said Mr Sicilia.