Investment update – October 2022

Here’s a look at what’s been happening in investment markets recently and what it means for your superannuation.

What happened in markets in October?

Major share markets around the world rebounded over October, especially in Australia. The ASX All Ords indices continuously climbed from the beginning of the month.

This occurred against a backdrop of rising interest rates, driven by high inflation, that stoked worries about major economies entering a recession.

The big picture

Why is there concern about different economies, like the UK, Europe, and the US, heading into recession?

When interest rates are high, consumers direct more of their wages towards essential items, such as home loan repayments and living expenses. And living expenses are increasing because the cost for the companies that supply our goods and services is also increasing.

If demands for goods and services falls dramatically, then businesses start to suffer. This is what central banks are attempting to avoid. They are trying to increase interest rates enough to curb inflation, but not so significantly that demand drops far enough to push economies into recession – a tricky tightrope to walk.

How your investments are performing

Higher interest rates can be beneficial to some defensive assets in which your super may be invested, such as cash and term deposits. But it can be detrimental to other assets such as high-growth equities and infrastructure and property, where high interest rates have caused valuations to decline.

Adding value to your super balance

The assets mentioned above are represented in various mixes in the different investment options that First Super offers. In good news for members, all five investment options produced positive returns for the month of October. This was largely attributable to Australian and international equities i.e., share markets. Meanwhile, international bonds and some private equity and infrastructure investments detracted from the monthly returns.

Looking ahead

In general, the effects of inflation and interest rate movements – and whether they slow down global economies – will remain a key focus. Financial markets will react to whether central banks are managing this well or not.

How other events continue to unfold, such as the Russia and Ukraine conflict, whether China retains or eases their zero-COVID policy, and how the energy crisis in Europe is managed, will also have an impact on the performance of financial markets and by extension your super balance.

Need help?

Stay up to date with your investments by logging into your firstonline account or visiting the Investment returns and crediting rates webpage.

To discuss your investments with us, you can call 1300 360 988 or email mail@firstsuper.com.au.

Issued by First Super Pty Limited (ABN 42 053 498 472, AFSL 223988) as Trustee of First Super (ABN 56 286 625 181).

Past returns are not an indicator of future returns.

This article contacts general advice which has been prepared without taking into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you or read the Product Disclosure Statement (PDS) before making any investment decisions. To obtain a copy of the PDS or Target Market Determination, please contact First Super on 1300 360 988 or visit our website at firstsuper.com.au/pds.