Rest’s fears of inflation impact on performance

Rest is concerned that persistently high inflation and political turmoil will cloud the investment performance of its super options.

During the financial year 2022–23, the fund’s MySuper Core Strategy option delivered returns of 9.2 per cent, but it described how the period had been a “challenging time”.

In a quarterly investment update for the three months to 30 September, it said it remains “cautious” about the current market outlook. 

While high inflation and political volatility had been present since the start of the year, Rest said investment markets had managed to navigate it well early in the quarter. However, the market sentiment turned negative later in the quarter as inflation remained above target and central banks indicated interest rates will be higher for longer.

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During the quarter, Rest’s Core Strategy option lost 0.5 per cent, global bonds lost 1.8 per cent and its international shares option lost 2.3 per cent. 

The fund said: “We think these issues will continue to cloud the investment outlook and as such we are not taking strong positions in any particular asset classes. 

“Instead, we are aiming to maintain a balanced mix of investments that are well-diversified. We anticipate this will provide some degree of resilience to help offset the volatility we’re currently seeing in share and debt markets, and help deliver strong returns over the long-term. 

“Of course, we are always mindful that market volatility can often provide opportunities to buy attractive investments at discounted prices. We will look to take advantage of such opportunities if they arise, setting the portfolio up well for the long-term.”

Positive performance during FY22–23 came mostly from overseas shares, agriculture, and Australian shares.

On the other hand, listed infrastructure, global listed property and unlisted property as well as private equity all detracted from performance.