How your super performed in the first quarter of 2024

We’re happy to report that in general, most smartMonday options kicked off 2024 with strong results. Here’s everything you need to know about how the economy and share markets impacted your super in the first quarter of this year.

Globally, the first quarter of 2024 saw fears of a US recession fade and equity markets soar to all time highs led by the gains of technology giants.

The rally in global equity markets provided strong returns for smartMonday’s growth and balanced focussed options, with many options outperforming peer medians over the March quarter.

Inflation remains a stubborn issue, but there has been some progress in Australia and around the world bringing it into check. As inflation lowers, interest rates will fall and expectations of falling interest rates have been beneficial to the rate-sensitive asset classes, like bonds, bolstering defensive options with high fixed interest and cash exposures.

Despite ongoing uncertainty over the inflation outlook both here and abroad, returns have been assisted by strong share markets both internationally and in Australia.

The technology sector was a major driver in pushing equity markets to new peaks. Growth was reinforced by the continued strength of the artificial intelligence thematic, as investors remain optimistic about opportunities in AI.

Meanwhile, expectations of falling interest rates have assisted rate sensitive asset classes including property and financials.

There were updates on smartMonday’s investment in Excelsior Renewable Energy Investment Fund II LP recently as the fund began making its first investments in a diverse portfolio of renewable assets.

The Excelsior fund invests in middle-market renewable energy infrastructure including wind, solar, storage, utility-scale, and distributed generation in North America.

This focus on renewable energy will directly contribute to adding green energy to the US energy mix, reducing carbon emissions and bringing the country closer to targets that will help it align with the Paris Agreement and limiting warming to 1.5℃.

One of the initial investments is a co-investment in the Faraday Solar project. Faraday Solar is a 682.5 MW ground-mounted solar facility in Utah in the US.

At the end of last year, the team behind Excelsior successfully closed on a $1.3 billion USD financing package for Faraday. It is one of the largest ever renewable energy project financings.

Amid all the good news there is still an elevated risk of volatility over the coming year for a number of reasons. Global equities have made strong gains over the last six months, bringing an elevated risk of a market pullback, especially if the expected trajectory of interest rate cuts, particularly in the US, doesn’t materialise.

Rate cuts are expected mid-year in Europe where inflation is now close to its 2.0% target, reflecting weak industrial production, retail sales, and consumer confidence. There are also geopolitical uncertainties from the conflict in the Middle East, and the risk of supply chain disruption.

Our investment portfolio positioning reflects a conservative reading of these factors. We remain focused on interest rate-sensitive securities during a period of elevated interest rates and subdued consumer spending.

Our exposure to share investments, which benefitted recently has been rebalanced towards our preferred underweight position, on expectation of a slowing global economy.

smartMonday’s MySuper investment options are designed to suit you at different ages, adjusting the risk level you are exposed to as you get older. For this reason, the strongest returns were in the lower age groups where more risk is tolerated.

Our MySuper Age 35 returned 6.3% for the quarter, MySuper Age 40 returned 6.2% and MySuper Age 45 returned 5.9%, MySuper Age 50 returned 5.6% and MySuper Age 55 returned 5.2%.

In our High Growth options, which have a higher exposure to global equities, smartMonday PRIME High Growth Active returned 7.2% for the quarter and PRIME High Growth Index returned 7.5%.

*Returns are on a per annum basis Past performance is not a reliable indicator of future performance.

smartMonday will be making some changes to our investment menu from 1 June 2024. Read more about these changes here.