Hostplus’ SMI options deliver strong results amid falling markets

The financial year has ended, and it was a volatile time for investment markets. The Australian share market alone fell by more than 10% for the financial year to 30 June 2022.¹  

Amid this volatility, Hostplus’ Self-Managed Invest (SMI) Balanced investment option delivered a positive return of 1.48% for the year. SMI sector options also produced great results for investors this financial year – Infrastructure delivered a 9.5% return and Property a 17.14% return.

The Hostplus SMI Balanced option follows an actively managed, diversified investment strategy. It aims to smooth out your returns over the long term by choosing investments, in both listed and unlisted assets, based on how we believe they will perform in different market conditions.

For example, the revenue from some of our infrastructure and property investments is linked to inflation. When inflation goes up, as it has done over the past few months, that’s a good thing for those investments.  

Currently, we have fewer investments in equities (shares) than most of our super fund peers, and almost no investments in fixed interest (bonds), both of which fell in 2022. In 2015, we decided to reduce our investments in bonds in the belief they wouldn’t perform well while interest rates remained low. Our active management strategy is informed by regular and independent valuations of our listed and unlisted assets, according to our published Valuations Policy and in line with APRA standards.  

Our Valuations Policy considers a range of factors, including the type of asset, its investment time frame and the economic environment. Updates to asset valuations are reflected in the unit prices of the Fund.

Super is about the long term and we’ve designed our investment strategy with that in mind.

While past performance is not a guarantee of future performance, the entire team at Hostplus will continue to work tirelessly towards our goal of achieving the best possible long-term retirement outcomes for our members and investors.

While our SMI Balanced option delivered a positive return, the SMI Indexed Balanced option fell by -5.74% over the year.  

As an indexed option, it aims to mirror the performance of the wider market. When the markets are performing well, the option will reflect this. When they are not, the option will reflect that too.

SMI Indexed Balanced is a passively managed option, meaning it has a much lower investment cost than the SMI Balanced option. It’s one of the lowest-cost diversified investment options for super in Australia, featuring a total investment fee of just 0.03%.  

This is a different approach to an actively managed investment option, where we specifically choose investments based on how we believe they will perform under different market conditions.

The one-year results for these two options were exceptional this past year. However, it is important to always remember these are long-term asset classes and one-year outcomes are not representative of long-term expectations.

The options have been designed to be resilient in these volatile markets and have benefitted from higher consumer demand in a Covid-recovery world.

This is due to diversification in the portfolios from both a geographic and sector basis, removing concentration risk. And, many of the assets within the portfolios have strong in-built inflation protection, meaning their performance hasn't suffered due to the recent high inflation.