Keeping your informed during COVID-19
Investment markets have largely recovered from the COVID-19 related market volatility of March 2020. However, life remains far from normal.
Measures to protect community health, especially in some of our largest cities, are still implemented, when required, and we’ve all become accustomed to government support programs to assist the people impacted. While the extreme market volatility of last year has faded, the investment environment is complicated.
That’s why we have this space to keep you informed with investment news and insights, government support measures, and more.
As always, if you’re worried about money, we encourage you to seek financial advice. At MLC, we’ve been helping Australians obtain financial security for over 130 years. Reach out to us if we can help.
Insights and information
Coronavirus & the impact to your super & investments
There’s no such things as a ‘one-size-fits-all’ answer on what the best thing to do is.
As a generalisation, people close to retirement or in retirement often have many years ahead of them. In those situations, having some exposure to ‘growth assets,’ like shares, is important as their higher return potential, can help to maintain people’s spending power. But having growth assets like shares in your retirement portfolio may expose you to increases in value but it also exposes you to market falls like the ones we saw earlier this year. The more you invest in growth assets the greater the fluctuations in your capital.
Yet the more stable investments tend to have much lower returns. Take term deposits for example, they may provide relative stability in your capital value but the low interest rates payable on term deposits over the past decade have certainly made it harder for people nearing retirement or in retirement to rely on them to keep pace with the cost of living.
When investing, you need to be prepared for all sorts of outcomes. Understanding the level of fluctuations your investments may experience will help you be prepared for changes when you’re drawing a pension from your superannuation.
Plum offers a range of portfolios with varying risk and return characteristics to suit different needs.
We recommend you discuss your situation with your financial adviser who can help you choose the right investments for your personal requirements. There are also a range of investment, tax, social security and lifestyle strategies that may help you adapt your strategy as you progress through your retirement. If you don’t have a financial adviser, please call us.
Plum investment options, has been managing Australians’ savings since 1985, and are applying all their knowledge, experience, and skill to both defend the value of our clients’ investments from the worst effects of market falls and to also position them to benefit from the recovery that will eventuate.
Although share markets have regained a large portion of the ground they lost in March, there’s still so much economic and business uncertainty. This being the case, we continue to manage portfolios with an intensive focus on risk-management.
Consistent with this, we’ve been increasing exposure to investment-grade US corporate bonds. A corporate bond is a type of fixed income investment that is issued by a company. The company gets the capital it needs and in return the investor is paid a pre-established number of interest payments at either a fixed or variable interest rate.
Corporate bonds are generally regarded as being less risky than shares.
We have also been relying on derivative strategies to participate in share markets. Through derivatives, we can hedge against downside risks while also capturing some of the upside when markets rise.
Some of the key indicators our investment experts at MLC Asset Management are watching include:
- Conclusive evidence of a second wave of infections could have a negative effect on investment markets due to the impact on economic growth, employment and company profits. Conversely, evidence that transmission/deaths are falling would see more effort focused on re-opening economies and be positive for company earnings.
- Real progress towards a vaccine that can be produced cost-effectively would be a major boost to economies and markets. Similarly, cheap effective treatment options might reduce the stringency of preventative measures and open economies more quickly.
- At some point government support mechanisms may become too expensive to maintain. Judging how to handle this ‘cliff edge’(when households and businesses come off government support) will be a major political and economic challenge.
As events unfold our investment experts continue to evolve the potential scenarios that could unfold, and adjust the positioning of Plum’s multi-asset portfolios to either improve potential returns or reduce risks.
If you’re a defined benefit member with an accumulation account, you can apply for a COVID-19 Early Release payment from the funds in your accumulation account. If there’s not enough in your accumulation account to cover the payment, or you’re a defined benefit member without an accumulation account, it will generally not be possible to make a payment from your defined benefits.
Yes, the buy-sell spreads of some managed investments are fluctuating daily due to current market conditions. If there are any other changes to fees and costs, we’ll update this on our secure website – you can log in at plum.com.au
Buy-sell spreads are linked to transaction costs within a fund.
When investors deposit or withdraw money from investment products they are in turn creating costs for the fund. For example, the brokerage costs involved in buying or selling shares for the fund.
The buy-sell spread ensures that these costs are incurred only by unitholders who transact. Plum and the fund managers don’t profit from these spreads.
Buy-sell spreads can change and are often higher when markets are volatile—as they are today.
An increase in the buy-sell spread will increase the cost associated with selling or switching an investment and may also be reflected in a lower valuation of the investment.
Buy-sell spreads are located within the investment menu of the product’s PDS (Product Disclosure Statement). However, given that buy/sell spreads are changing on a frequent basis we’re putting this information online to provide you with the most up-to-date information available.
For the latest available information on investment option buy-sell spreads, log in to your account at plum.com.au
If you’re invested in a Plum product, then you’re likely to be invested in either MySuper or one of Plum’s many diversified investment options. If you’re in MySuper or a diversified investment option, you may have some exposure to unlisted assets. Private equity, real estate and infrastructure are the unlisted assets Plum investment options may hold.
Rather than paying any price to own such assets, our investment experts at MLC Asset Management, have been patient and disciplined on members’ behalf. They’ve only bought assets when confident that the prices they’re prepared to pay can be justified by the prospect of superior long-term risk-adjusted returns.
Unlisted assets make up a relatively small component of Plum diversified investment options, with the rest invested in assets that are listed on a public market like the share market or bond market.
Listed asset classes are valued on a market and their values incorporated into unit prices each day. That’s one of the reasons your account value changes from day-to-day. Unlisted assets are valued a lot less frequently because they’re invested in private companies and externally managed unlisted funds with adjustments to their values flowing through from the managers of those funds over time.
All asset classes have been affected by COVID-19, including unlisted assets. Private equity is one of the main unlisted assets in Plum’s multi-asset portfolios.
MLC Asset Management conducted an out-of-cycle revaluation of private equity assets, which resulted in a reduction to private equity values in early April. This has had a flow-on effect to certain multi-asset portfolios with decreases in investment option unit prices ranging from 0.14% to 1.39%. The lower the allocation to private equity, the less the impact on the unit price.
The private equity revaluation ensured that asset values were fairly reflected in unit prices for any members choosing to switch, add to, or redeem monies in affected investments, and thereby protected the interests of members. It was included in the unit prices of our investment options and is reflected in account balances.
MLC Asset Management continues to monitor investment markets closely to ensure the pricing of unlisted assets remains appropriate for the circumstances as they evolve and to ensure all investment values reflect ‘fair value’ across all member account balances.
You can find out about the Government’s support packages for individuals and households here.
Plum is aware of COVID-19 themed emails and text messages circulating which contain malicious software, lead to phishing sites or asking you to donate money to a bank account.
The emails and text messages may purport to be from legitimate organisations, including government agencies, and request you to click on links, open attachments or donate money to a bank account. Please see two examples below.
If you have clicked on links or attachments in a suspicious email or SMS, or sent funds based on a request received from a suspicious email please call Plum on 132 652.
If you receive a suspicious message, do not click on any links or attachments. Please forward it to firstname.lastname@example.org and then delete it.
You can also read our article for more information on investment and super scams, or visit the Federal Government's Australian Cyber Security Centre website for more information about COVID-19 related scams.
This information is current as at April 2020.
Plum is aware of current scam phone calls targeting Australians. The caller may claim to be from an organisation that can assist you to get early access to your superannuation. The caller may ask for your personal and superannuation details.
If you ever have any concerns as to the legitimacy of a call, hang up and call the company back on a publicly listed number.
If you have received this type of call and have provided information about your superannuation, please contact Plum immediately on 1300 55 7586.
If you receive a text message saying your superannuation fund is going to release your super, and you did not request this, contact us.
If you have provided personal or banking details, please also contact your financial institution.
This information is current as at May 2020.
This information is accurate as at 16/04/2020. This communication has been prepared by NULIS Nominees Australia Limited (‘NULIS’) ABN 80 008 515 633 AFSL 236465, in its capacity as trustee of the MLC Super Fund. NULIS is a member of the IOOF group of companies (‘IOOF Group’). An investment with NULIS does not represent a deposit with or liability of, and is not guaranteed by IOOF. This information may constitute general advice. The information contained in this communication is general in nature and does not take into account personal objectives, financial situation or needs and because of that you should, before acting on the advice, consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs, plus consider the relevant Product Disclosure Statement. Opinions constitute our judgement at the time of issue and are subject to change. Neither NULIS nor any member of the IOOF Group, nor their employees or directors give any warranty of accuracy or reliability, nor accept any responsibility for errors or omissions in this communication. Past performance is not a reliable indicator of future performance. The value of an investment may rise or fall with the changes in the market.