Late year rally limits 2022 losses
Turbulent global forces affected investment performance last year, until some calm returned in October. Ed Tomlinson explains.
Investment returns improved in the last quarter of 2022, ending a year of mostly poor performance on a high note.
All smartMonday investment options recorded gains from October to December last year, with stand-out results in Australian shares and property.
But the late-year rally wasn’t strong enough to flip 2022 returns positive, with the year ending in negative results across all investment markets (excluding cash).
Our performance results are in the table below, with comparison to the median return of similar options in other funds. You can see the performance of all our options here.
smartMonday investment performance to 31 December 2022 (%)
Super option
10 years p.a.
7 years p.a.
5 years p.a.
3 years p.a.
1 year p.a.
3 months p.a.
MySuper age 40*
7.5
6.1
3.8
-6.9
6.4
MySuper age 45*
7.3
5.8
3.5
-7.0
6.1
Peer group median
7.1
5.9
4.2
-6.8
4.8
High Growth - Index
9.6
7.9
6.6
4.5
-8.0
6.8
Peer group median
9.5
7.2
6.2
4.2
-7.2
5.6
Growth - Index
8.6
6.9
5.7
3.7
-8.0
5.8
Peer group median
8.5
7.1
5.9
4.2
-6.8
4.8
Balanced Growth - Index
7.3
5.9
4.8
2.9
-8.0
4.8
Peer group median
7.5
6.2
5.2
3.7
-5.6
3.8
Moderate - Index
3.8
2.5
1.6
-1.0
-9.6
2.5
Peer group median
4.4
3.5
2.8
1.2
-4.3
2.1
Defensive - Index
1.5
0.8
0.3
-1.7
-8.4
1.6
Peer group median
1.8
1.3
1.1
0.3
-1.1
1.2
Data: SuperRatings Accumulation Fund Crediting Rate Survey. Notes: All figures to the end of December 2022. The ‘peer group median’ reflects the SuperRatings category the option appears in. Performance shown net of investment fees and taxes. Annualised performance shown for periods greater than 1 year. Past performance is not a reliable indicator of future performance. *Average smartMonday member is 43 years of age as of September 2022.
What happened in 2022?
It was a rough year for investors due to multiple factors: rising inflation, aggressive interest rate rises, war in Ukraine, geopolitical tensions, and increased risk of recession. These led to poor returns across all investment markets (excluding cash) during calendar year 2022.
Investment markets improved in the last three months of the year as fears of rapidly increasing inflation eased.
Keep in mind that while returns for 2022 were negative, they are eclipsed by significant gains in 2021. For example, in our MySuper option for the 40-year age group, investment value fell 6.9% last year but increased 16.9% during calendar year 2021.
To get a more detailed understanding of what took place last year please check out our 2022 market downturn: FAQs article, and for thoughts on managing super when your balance has dropped, read If your super has fallen, what should you do?
What may happen in 2023?
As we progress into the new year, it looks like central banks will ease the pace of rate increases as they wait to see how economies perform. For now, consumers remain confident, and unemployment at low levels.
However, the global economy and company profits seem set for difficult times this year, as:
1. we expect the rapid rate increases by most central banks in 2022 to impact economies soon
2. consumer concern over cost-of-living increases indicates the damaging impact of inflation
3. both of these forces will likely create further sharemarket volatility in 2023.
In response, we are proactively positioning our investment portfolios to balance the high uncertainty driving short-term market conditions, such as paring back from Australian shares and developing alternative asset portfolios. We will keep you updated on market conditions and any changes we are making as the year progresses.
Have questions? smartCoaches have answers
- Live chat on our website by clicking on the speech bubble icon
- Phone: 1300 262 241
- Email: smartcoach@smartmonday.com.au