A message from Steve Gamerov, Head of Diversified Portfolio Management

August 2022

The past financial year has certainly not been one of sailing on smooth waters. Across the globe we continued to fight Covid with its various strains such as Delta and Omicron.

Then there is the war in Ukraine that commenced in late February, which has been felt across the globe through increased prices for everything from oil and gas, to food.

All of this has meant that inflation, which is a measure of price rises in an economy, has risen to levels not seen for decades. In early May, the Reserve Bank of Australia lifted the cash rate for the first time in over 11 years, ending the era of super low interest rates and hoping to apply brakes to consumer spending to restrain price increases and inflation more broadly.

The market response to these global events can be seen distinctly in the returns of Australian and international shares for the financial year. The S&P/ASX 200 fell by 10.2%, just the third financial year loss in the past decade, while the global share market was down 13.6%1 for the same period.

Given this investment market volatility, our MySuper Growth Portfolio proved relatively resilient over the one year to end 30 June 2022, returning -1.42%.2 This follows on from a very strong 2021 financial year, in which our MySuper Growth Portfolio delivered a one-year return of 20.27% (to end June 2021).2 3

Taking a longer-term view, members in the MySuper Growth portfolio have also received a positive return of 5.29% p.a.2 over three years to 30 June 2022, which also puts it in top quartile of performance against peers over this period.4

Importantly for our members, this makes Plum’s MySuper Growth Portfolio one of the top performing MySuper products for its one and three-year return.4

For MySuper members who are under 55 and have been invested for five years, their return has been 6.3% p.a.5  over the period ending 30 June 2022. This is also above the top quartile return of 6.26% p.a. for 5 years to 30 June 2022, according to SuperRatings SR50 MySuper Index.6

To put these returns into perspective, if you are under 55 and had a balance of $100,000 invested in the MySuper Growth Portfolio five years ago, your balance would now be $135,679.7 And this excludes any ongoing compulsory super contributions made during that time.

How we manage your super to help cushion the impact of market falls

Whilst the short-term has been impacted by market volatility and modest investment returns, it is important to remember that super is a long-term investment, and when we invest your super, we do so with the aim of maximising your long-term savings and helping you retire with more.

When we launched our redesigned MySuper portfolios in March 2019, our aim was to maximise our members’ chances of financial wellbeing in retirement. Some of the ways our MySuper portfolios have minimised risk over the past year while staying focused on achieving sustainable long-term returns include:

1. Diversifying your investments.

  • The MySuper portfolios are invested across a wide range of diversified, quality investments. And because returns come from many sources that behave differently in times of listed market volatility, they are less impacted by adverse market movements. This diversified approach to investing enables our members to grow their balances over the long-term, whilst offering some protection during market downturns.

    What it means practically for members in our MySuper Growth Portfolio, is decreased share market risk and a diversified exposure to other asset classes. While MySuper Growth Portfolio still has a large portion invested in growth assets, including listed shares, its exposure to other investments such as private credit, alternative assets and commodities like metals, energy and agriculture, helped to cushion the impact of the year’s difficult market conditions.

  • We invest in a range of unlisted growth assets such as property, infrastructure and private equity (private companies not listed on share markets). These assets have different return patterns to shares and traditional fixed income investments and can offer attractive returns during times of share market volatility.

    Within the MySuper portfolios, these investments include Tilt Renewables, Australia’s largest renewable energy platform, and AusNet which owns Victoria’s regulated electricity transmission network. They also include high quality property assets, spread across the office, retail and industrial sectors as well as a diversified exposure of private equity investments.

    These assets offer the potential to deliver higher returns to members over the long-term and tend to be less impacted by short-term market events. For example, our investments in infrastructure focus on assets that provide sustainable long-term cash flows, and they have acted well to help stabilise the portfolios over the past financial year.

  • With our MySuper life stage approach, as you near retirement, we automatically reduce your exposure to higher risk growth assets and increase your investments in more defensive investments such as bonds and cash which may help to reduce the impacts of volatile markets.

    We do this gradually over a 10-year period so that when you reach 65, your MySuper asset mix has around 66% exposure to growth assets and 34% exposure to more defensive assets. Increasing the allocation of defensive investments in this way is designed to limit the impact of any adverse market movements that you may encounter as you approach retirement age.

Prospects for the next financial year

The cornerstone of Plum’s investment philosophy is effective diversification and consistent with this, our strategy includes cushioning portfolios when markets are choppy, and to position them for growth when conditions are more normal.

The global economic growth outlook has become more challenging since the start of the calendar year. The troubling trio of rising inflation, higher interest rates and the war in Ukraine is providing a more challenging and painful investing climate. We believe that markets will continue to be volatile while interest rates continue to rise to combat high inflation.

Super for many members is a multi-year, even multi-decade commitment. Therefore, in turbulent markets, it’s especially important for members to keep their eyes on the long-term aim of super, which is to achieve financial wellbeing in retirement.

Plum believes that maximising returns over time is about getting the balance right between understanding opportunities and managing risks. Our approach provides members with a blend of assets, combining investments that, we believe, can be resilient through changing economic and market conditions alongside those with the potential to deliver long-term capital growth.

Ours is a flexible and responsive investment approach designed to successfully steer members’ super over the long haul. We fortify the MySuper portfolios by increasing exposure to defensive assets and protective strategies ahead of potential dangers, while providing exposure to growth assets that aim to maximise your chances of retiring with more.

The above information is current as at 29.07.2022.

1 MSCI All Country World Indices (hedged to $A).
2 All returns are net of investment fees and tax considerations and do not include administration fees and costs. For details of relevant fees and costs, refer to the PDS and Investment Menu.
3 Source: Plum Investment Reporting.
4 Plum MySuper Growth Portfolio option compared to the SuperRatings Fund Crediting Rate Survey – SR50 MySuper Index to June 2022.
5 Plum MySuper uses a combination of the three investment portfolios (MySuper Growth, MySuper Conservative Growth, MySuper Cash Plus), to provide a mix of growth and defensive assets which changes depending on your age. When you’re under age 55 you’ll be 100% invested in MySuper Growth. The MySuper investment strategy changed from a single diversified to a lifecycle strategy on 22 March 2019. The returns for the MySuper Growth Portfolio for the period before 2019 are based on the previous single diversified investment strategy. The return for 2019 is based on the return achieved from 1 July 2018 to 22 March 2019 with the single diversified strategy, and the return achieved from 23 March 2019 to 30 June 2022 is based on the lifecycle investment strategy. The return for 5-years is based on return of the MySuper product over that period which had different investment strategies. All returns are net of investment fees and tax considerations and do not include administration fees and costs. For details of relevant fees and costs, refer to the PDS and Investment Menu.
6 SuperRatings Fund Crediting Rate Survey – SR50 MySuper Index to June 2022. Returns are calculated net of investment fees, tax and implicit asset-based administration fees. Explicit fees such as fixed dollar administration fees, exit fees, contribution fees and switching fees are excluded. Past performance is not a reliable indicator of future performance. Ratings are only one factor to be taken into account when choosing a super fund.
7 This figure excludes any compulsory SG contributions made by an employer or any non-concessional contributions made from after tax-dollars contributed over that time. All returns are net of investment fees and tax considerations and do not include administration fees and costs. Past performance is not a reliable indicator future performance.

Important information

This communication has been prepared by NULIS Nominees Australia Limited ABN 80 008 515 633 AFSL 236465 (NULIS), as trustee of the MLC Super Fund. NULIS is a member of the Insignia Financial group of companies comprising Insignia Financial Ltd ABN 49 100 103 722 (formerly IOOF Holdings Ltd) and its related bodies corporate.

This information is general in nature and has been prepared without taking account of an investor’s objectives, financial situation or needs. Because of that, investors should consider obtaining independent advice before making any financial decisions based on this information.

Investors should obtain the relevant Product Disclosure Statement before making any decision about whether to acquire or continue to hold the product. A copy of the Product Disclosure Statement or other disclosure document is available on mlc.com.au or plum.com.au.

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.

Any opinions expressed in this presentation constitute our judgement at the time of issue and are subject to change. Insignia Financial Ltd and NULIS believe that the information contained in this communication is correct and that any estimates, opinions, conclusions or recommendations are reasonably held or made at the time of compilation. However, no warranty is made as to their accuracy or reliability (which may change without notice) or other information contained in this presentation. Any projection or forward looking statement (‘Projection’) in this communication is provided for information purposes only. No representation is made as to the accuracy or reasonableness of any such Projection or that it will be met. Actual events may vary materially. Insignia Financial Ltd and NULIS and their related bodies corporate do not accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in this communication.