Hostplus today announced it has delivered a positive 1.57% return for members in its Balanced (MySuper) Option for the financial year, employing active management strategies to navigate difficult global investment markets.
In a year where global investment markets were plagued by challenging investment conditions, Hostplus Chief Executive Officer, David Elia, said he was very proud that the Fund could deliver a positive return for members, especially in a year where the industry median return for Balanced options is expected to be in negative territory, according to SuperRatings’ estimates.**
Against these estimates, it is likely that Hostplus will maintain market leading investment returns over all investment periods*.
“Off the back of the 2021 financial year, where we saw Hostplus deliver our best annual return in the Fund’s history of 21.3% for the Balanced option, it was a very different set of circumstances we faced this financial year with global investment markets afflicted by heightened political tensions, rising inflation and rising interest rates.
“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*,” said Mr. Elia.
Mr Elia further emphasised that the Fund’s investment outperformance track record was a testament to Hostplus’s active investment approach, especially in navigating volatile markets.
“We have a firm belief that active management will continue be the key to managing the continued volatility we are expected to see over the coming years. Our active management approach has seen Hostplus perform well in both bull and bear markets over our 34 year history**.
“Actively managing and applying a strategic asset allocation to perform under different market conditions, enables us to smooth out returns over the longer term, as opposed to some of the lower cost, passive products in the marketplace where investors are more exposed to market movements.
“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.
Hostplus, Chief Investment Officer, Sam Sicilia, reinforces the importance of active management, noting the positive returns are the result of long-term investment decisions.
“In 2015 Hostplus made an active decision to significantly reduce its exposure to bonds in the belief bond portfolios would not provide downside protection to market volatility, during the low interest rate period. Equity and bond markets have, independently, delivered negative returns at a level that we have not seen since the GFC. Together, they have performed at levels not seen for more than a generation.
“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.
Hostplus also achieved a positive return of 2.36% for its Socially Responsible Investment (SRI) Option, in the same financial year it announced its commitment to Net Zero 2050, further emphasising the role active management can have in delivering strong investment returns.
“What this tells us is that when it comes to investing your super sustainably, it is not just what you exclude, but what you include that makes the biggest impact. We are glad to be able to let members choose what they invest their money in, whilst also providing a positive net return in the 2021-22 financial year.
"Hostplus is one of the largest institutional investors in world-changing technology with more than $3 billion invested in companies like Commonwealth Fusion Systems and First Light Fusion, which can help to change our environmental impacts for future generations,” said Mr Elia.
* Source: SuperRatings estimates as at 7 July 2022 https://www.lonsec.com.au/super-fund/2022/07/07/media-release-1-of-super-invested-in-1992-estimated-to-be-worth-7-67-30-years-after-the-super-guarantee-was-introduced/. Hostplus Balanced (My Super) Option annual return to 30 June 2022.
** Hostplus Balanced (My Super) Option annual return since inception (Mar 1988) to 30 June 2022 is 8.787%.
The information in this article is correct at time of publication.