How your super performed: Q2 2024
While global markets during the second quarter of 2024 have seen mixed results, our 12-month returns have been fantastic news for sustainable investment. Future Super’s annual performance update showed our Balanced Index option hitting double figures over the financial year, returning 10.1% and landing in the top 5 Sustainable balanced options of 2023-24, according to SuperRatings.
The fossil fuel-intensive energy sector in Australia, including companies like Woodside and Santos, has been a drag this year, returning –1.0%. Staying free from fossil fuels helped us outperform the 8.8% superannuation market median, showing that fossil fuels are for dinosaurs.
In fact, financial analysis showed that fossil fuels have been dragging investments down for as long as 10 years! Plus, keeping money out of fossil fuels and other harmful industries gives us more space to invest in other growth areas such as healthcare, social enterprise, and renewable energy.
Tech continues to boom
This quarter, the upwards trend across global shares rode out persistent inflation. The US share markets did better than expected, thanks to strong performance from tech giants like Nvidia, Apple, Meta and Tesla – although the fact that one sector is propping up the rest could signal potential fragility. We’re also starting to see interest rates stabilise in the US and even start to fall around Europe.
Big tech companies have continued to bolster our performance – particularly US companies, which propelled America’s two largest stock market indices – the S&P500 and the Nasdaq – to all-time highs.
Among our international shares investments, a company called Vertiv, which reduces the carbon footprint of cloud servers with its energy-efficient cooling systems, has been a star performer, returning a whopping 248%. AI microchip developers Nvidia also continued to deliver, returning 191%.
Future Super’s exposure to all these strong performers has helped buffer us against sociopolitical and economic uncertainty.
Meanwhile in Australia…
It's been less rosy here in Australia lately, where energy and materials sectors have been lagging. Australia is the only G10 nation where inflation has increased, raising the spectre of further RBA rate hikes. This is not great news for anyone with a mortgage or other debt, the result being that the Aussie property boom is starting to pull back after an exceptional run, and consumer spending is beginning to dampen under the weight of household debt burdens.
While Aussie shares have lagged global markets, there have been a few star performers here – such as cancer diagnostics firm Telix, thanks to high demand for its prostate cancer imaging service.
When we look at investments, we monitor these market indicators to gauge the trajectory and assess the balance between potential risks and returns.
The big picture
It’s a big election year globally. Unexpected or uncertain election results tend to impact markets. Both the close-run snap election in France and President Biden’s withdrawal from the upcoming US election race have been making waves in the markets.
Markets also attempt to anticipate central bank policy moves and the impact on interest rates, and therefore interest-based assets such as bonds. The ongoing global market volatility is largely driven by speculation surrounding the US Federal Reserve Bank’s future actions on rates, with predictions fluctuating between one to two cuts.
Super helping ease the housing crisis
As well as shares and bonds, superannuation is invested in what we call alternative assets. These are assets you can’t trade on the share market, and include things like green energy infrastructure or real estate.
Some of our super options invest in the Nightingale Wurru Wurru biik development – four brand-new sustainable affordable housing communities in the heart of Brunswick, Melbourne. The fossil fuel-free buildings feature solar PV, rainwater tanks, heat pumps, salvaged materials, thermal efficiency and rooftop veggie gardens.
At their heart, they’re designed to build community and provide affordable housing for essential workers as well as vulnerable and marginalised groups. Building work has progressed well over the past year thanks to your support via Future Super, and we’re happy to announce that the first apartments and commercial spaces are now ready to move into, so this urban village will shortly be changing lives.
We’ll keep you posted, but wanted to thank you for helping Future Super to invest in a better world.
Past performance is not a reliable indicator of future performance.