Investor Spring 2017

Market news and investment insights



Turning threats into opportunities

Published annually, the Russell Investments/ASX Long-term Investing Report is the only widely-available report that provides Australians with a comprehensive and factual comparison between the long-term returns of Australian residential investment property, and key domestic and global asset classes.

Adopt a diversified investment approach with multiple assets and you’re well on the way to fulfilling your financial goals. We’ve heard this message before, but there’s never been a better time to remind ourselves why it carries so much meaning.

It’s especially true when you look at the investment performance trends of the last 10 to 20 years. The recently-released 2017 Russell Investments/ASX Long-term Investing Report shows five major threats facing Australians who have a habit of relying on traditional investment approaches for long-term growth. The conclusion? It’s time to kick that habit with the help of a diversified approach that can move between asset classes in real time.

Pause for thought

As Pete Gunning, Chief Executive – Asia-Pacific at Russell Investments, says, “The performance trends of key asset classes, particularly when combined with our strategists’ view that many markets globally are overvalued, should give investors ample reason to revisit their retirement portfolio exposures.”

Here are some revealing findings for the 10-year period to December 2016 that highlight why it pays to choose a diversified super portfolio.

  • The only asset classes to beat a typical balanced fund target were residential property, global bonds and Australian bonds.

  • Many growth assets performed disappointingly, including Australian shares and hedged global shares. Both fell further away from the leading asset classes for the period: residential investment property, global bonds (hedged) and Australian bonds.

  • While Australian property was once again the top-performing asset class, it showed a slight decline from last year’s report with dwelling approvals declining. The report’s authors believe the residential property market is overheated, and carries significant risk based on regions, dwelling types and suburbs.

Find and combine^ your super.

Right now, it’s even more rewarding.

Find out more

Competition terms and conditions are available here. NSW LTPS/17/15845, ACT TP17/01333, SA T17/1270

A few data highlights

In the 10 years to December 2016, Australian listed property continued its flat run from 2015 and was the worst performer at 0% p.a.

In the 20 years to December 2016, all asset classes, apart from cash (3.2% p.a.), outperformed a strategic balanced fund target.

In the 20 years to December 2016, Australian bonds (6.3% p.a.) lagged hedged global bonds (7.5% p.a.) and hedged global shares (7.2% p.a.).


Lower returns, slower growth and overvalued markets have largely become the norm of the investing environment. Then how do you grow your super to meet your wealth and retirement goals? The answer brings us right back to a globally diversified, multi-asset investment approach—a clear move away from a traditional, narrowly-focused portfolio.

From threats to opportunities

If you know the pitfalls to watch out for, the rewards of a diversified approach can be very promising. That’s where the five major threats identified in the report come into play—knowing the threats that can derail you also means knowing where the opportunities lie.

  1. Rear-view mirror investing

    Leave the past behind—at least when it comes to investment decisions. There’s too much risk in constantly looking to past performances for guidance on what to do today. We live in times of dramatic global economic and political uncertainties, which is sure to change the fundamentals behind future investment performance.

    The better approach lies in having an investment strategy that can respond in real time to market changes.

  2. Lack of portfolio diversification

    You’ve heard the time-honoured adage—don’t put all your eggs in one basket. It’s the same with pouring all your investments into one (or even two) asset classes.

    Instead, spread your investments across a range of asset classes to cushion your investments against any large losses in one asset class.

  3. Reliance on residential property

    Property is a hotly debated topic. While it’s true that residential property saw strong returns in the last 10 and 20 years, did you know that median house prices rose less in 2016 compared to 2015?

    It’s not about avoiding residential property altogether. It’s more about avoiding the risks that come with investing only in a single asset class. Again, diversity is key.

  4. Investing in over-priced traditional assets

    Our investment experts see lower returns and higher volatility being the norm for core asset classes like shares and bonds. The reason? Increasingly expensive equity markets, coupled with sudden market falls (because of numerous unexpected political changes around the world).

    But diversification can help you make the most of changing market conditions and protect your super against downturns in a specific asset class.

  5. Setting and forgetting an investment portfolio

    The days of ‘set and forget’ are over, especially in the face of volatile markets. Today, savvy investing means moving between asset classes in real time as market conditions change.

    Our global investment team’s dynamic approach means they can adapt to changing market opportunities and risks as required.

Listen to the experts…

Tim Cook, Director – Consulting at Russell Investments, believes “investors need access to a wider and deeper set of alternative investment strategies to reduce their reliance on traditional return drivers.” So how can you stay on top of all this when it comes to how your super is invested?

Look no further. As an iQ Super member, you already benefit from the knowledge and experience of the experts at Russell Investments. The strategy for our multi-asset portfolios is built on diverse sources of return, time and energy spent on the best investments, and active management of assets to minimise risks and take advantage of market opportunities.

…but make your voice heard too

Relying on the experts doesn’t mean you have no say in how your super is invested. Start by logging in to your account and using our Retire Ready tools to see if your current investment strategy is set up to achieve your long-term wealth and retirement goals.

You can also take our Investor Style Quiz to see what kind of investor you are and what strategy may suit you.

Find and combine^ your super.

Right now, it’s even more rewarding.

Find out more

Competition terms and conditions are available here. NSW LTPS/17/15845, ACT TP17/01333, SA T17/1270

A few data highlights

In the 10 years to December 2016, Australian listed property continued its flat run from 2015 and was the worst performer at 0% p.a.

In the 20 years to December 2016, all asset classes, apart from cash (3.2% p.a.), outperformed a strategic balanced fund target.

In the 20 years to December 2016, Australian bonds (6.3% p.a.) lagged hedged global bonds (7.5% p.a.) and hedged global shares (7.2% p.a.).



^ Before you combine your super, you should find out about exit or withdrawal fees your other fund might charge, as well as any entitlements or insurance cover that might stop when you close your other account.

Issued by Total Risk Management Pty Ltd ABN 62 008 644 353, AFSL 238790 (TRM). This communication provides general information only and has not been prepared having regard to your objectives, financial situation or needs. Before making an investment decision, you need to consider whether this information is appropriate to your objectives, financial situation and needs. This information has been compiled from sources considered to be reliable, but is not guaranteed. Past performance is not a reliable indicator of future performance. Any potential investor should consider the latest Product Disclosure Statement (PDS) in deciding whether to acquire, or to continue to hold, an investment in any Russell Investments product. The PDSs can be obtained by visiting russellinvestments.com/au

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