Defensive assets help Hostplus deliver positive returns

Hostplus has announced it has delivered a positive 1.57% return for members in its balanced option for the financial year, despite difficult global investment markets.

Research by SuperRatings had found that the median balanced option across all super funds had recorded a -3.3% fall for the 2021 financial year.

Hostplus chief executive, David Elia, said he was proud that the fund could deliver a positive return for members in a year when the industry median return for balanced options was expected to be in negative territory.

“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.

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“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,” Elia said.

Hostplus chief investment officer, Sam Sicilia, reinforced the importance of active management, noting the positive returns were the result of long-term investment decisions made back in 2015.

“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,” he said.

“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.”