March 2023 Quarterly Report

Key highlights

• All investment options delivered positive returns and the Triple S Balanced Default Option returned 4.3%.
• Australian and international equity markets returned 3.3% and 9.2%, respectively.
• Bond markets delivered a positive return despite a high level of volatility in the market.
• There are signs inflation has peaked. Over the 12 months to March, the Australian Consumer Price Index (CPI) decreased from 7.8% to 7%. 
• The Reserve Bank of Australia (RBA) increased the Official Cash Rate to 3.6% (increasing to 3.85% on 2 May 2023). 

Triple S returns to 31 March 2023

Returns net of fees and gross of tax, based on Super SA unit pricing formula. 

What happened in the markets from January to March 2023?

Although our focus is on the long-term, pleasingly all investment options delivered positive returns over the quarter with the Triple S Balanced Default Option providing a 4.3% return. 

However, financial markets were volatile during this period in part due to the collapse of three US regional banks, and the takeover of European bank Credit Suisse. Regulators in the US and Europe were quick to support the banking system, which meant we saw a rally in the markets, helping maintain positive returns. Funds SA has a very small exposure to US regional banks, so there was an immaterial impact to the fund.

In Australia, the RBA continued to hike rates, and we are seeing this impacting households, affecting consumer demand and confidence.

There are signs inflation has peaked – over the 12 months to March the Consumer Price Index (CPI) has decreased from 7.8% to 7%. Although the peak may have passed we are aware that the RBA believes inflation is still too high.

Globally, financial markets are likely to remain reactive in response to central banks balancing inflation and the flow on impacts to the broader economy.

Funds SA, together with their appointed fund managers and specialist advisers, continually monitor financial markets closely and position investment options appropriately.

What does this mean for your super?

Funds SA long-term investment strategy and agility gives us the ability to respond to market movements. Our options also provided strong long-term returns over 5 and 10 years as well, as shown in the table above.

Australian and international equities continued their recent gains with 3.3% and 9.2% respectively, and this strong return was experienced by the majority of our members who are invested in the Triple S Balanced Default Option with exposure to these investments.

Bond markets were volatile but continued the positive trend over the quarter, while the Cash asset class returned 0.8%. The interest earned on cash moved higher over the quarter as the RBA continued to increase the cash rate.

We encourage our members to seek financial advice before making any changes to their superannuation investments.  If you need help locating one, you can contact the Financial Planning Association of Australia.