21 July, 2022

Annual performance update 2021-22

The financial year ending 30 June 2022 was challenging for financial markets, with significant global and domestic volatility.

As expected, Spirit Super’s investment portfolios were not immune to global market pressures, with most of our investment options posting negative returns for the period. 

Despite short-term losses, our medium to long-term returns remain solid, and we’re confident our strategy has us well-positioned to protect and grow your super in the long term. 

Here we break down the global events and trends that affected your super’s performance throughout the year and what we expect in the future. 

A challenging year for super

After record-high returns across the 2020-21 financial year, returns were negative for most investment options for 2021-22. 

Our Balanced (MySuper) option delivered an annual return of minus 3.12% for accumulation members and minus 3.57% for pension members. 

While negative performance can be unsettling, it is essential to remember that super is a long-term investment, and performance should be assessed accordingly.

Periods of negative returns are expected from time to time, and our investment options are constructed with a focus on meeting long-term investment objectives. 

So, while short-term returns are disappointing, our medium to long-term performance is on track. We remain confident that our long-term investment strategy is continuing to offer solid returns for your retirement savings. 

Below we can see that our pre mixed options have delivered strong performance across medium and long-term horizons.1 

Table 1: Investment Returns - Accumulation Members 1,2,3
  1 Year  5 Years 10 Years 
Conservative  -0.33%  3.50%  4.64%
Moderate -1.96%
 4.60%  N/A
Balanced -3.12%  5.83%  7.97%
Sustainable -2.95%  5.72%  N/A
 Growth  -4.02%  6.96%  8.89%
 Table 2: Investment Returns - Pension Members 1,2 
1 Year 5 Years 10 Years
Conservative -1.01% 3.81% 5.26%
Moderate -2.27%
5.21% N/A
Balanced -3.57% 6.38% 8.93%
Sustainable -2.28% 6.51% N/A
Growth -4.62% 7.51% 9.92%

What were the main drivers of negative returns?

Several global events caused drawdowns across financial markets in 2021-22. The devastation of an ongoing war in Ukraine, supply-chain bottlenecks from the COVID-19 pandemic, a retreat from the globalisation of economies, rapid inflation and significant interest rate hikes all combined to create an environment of disruption and uncertainty. 

a graph showing Interest rate increases in response to inflation

Increasing interest rates and accompanying fears about global economic growth have led to falls in both fixed interest (also called bonds) and share markets. 

The global benchmark used to track the performance of bonds returned minus 9.33% across the financial year for the Australian investor. This negative performance was its worst year since its inception in 1986 and only the second time it’s recorded a negative return. The Australian bonds market suffered a similar fate, with a financial year return of minus 10.51%.5

Share markets have also faced challenges. 

The S&P 500 index (US share market) returned minus 11.92% across the financial year off the back of losses from January to June 2022. This amounted to the worst start to the calendar year in the US since 1970. 

At home, the Australian shares market has been marginally less affected, recording a financial year return of minus 7.44%.6

The year ahead

To look ahead, we must first understand the source of volatility in financial markets, as volatility is a measure of risk.

Prices in financial markets should incorporate the market’s current view on the economy’s future path. Volatility in prices comes when a lot of unexpected news changes those views. 

This is exactly what we have seen this past financial year. The magnitude of the impact of the COVID-19 pandemic, the outbreak of war in Ukraine and higher-than-expected inflation have surprised the market, causing volatility in the prices of financial assets.

Is it possible that these conditions will continue over the short term? If inflation proves to be more persistent than expected and business profits begin to fall, then the investment markets could face ongoing volatility.

During periods of market volatility, our disciplined approach to investment management is more critical than ever. By diversifying across various asset classes, including cash, bonds, shares, infrastructure, property and private equity, we can construct resilient portfolios that reduce the impact of downturns while ensuring members benefit from the upsides.

We also apply our active approach to investing to help manage risk. Indeed, our investment team has been gradually reducing the portfolio’s risk since late 2021 by reducing our exposure to riskier assets: shares, debt from emerging markets, and absolute return funds.

Managing your super during volatility

It’s natural to feel concerned about your super when markets are volatile and returns are low. But it’s important to stay focused on your investment horizon and objectives. This is where super is at its best. 

There will always be periods of poor returns in markets. That’s to be expected. But members that avoid switching investment options can participate in any subsequent market recovery. For more information, see our article on the risks of switching.

As always, we recommend you get expert advice to help select the best investment option for your personal situation.  Our Superannuation Advisers are here to help and can offer straightforward and practical advice to get on the right track. 

This service comes at no additional cost – it's part of being a Spirit Super member. 

To get in touch or book a one-on-one appointment, call 1800 005 166 or submit an online enquiry.

This article is for general information only and doesn’t take into account your objectives, financial situation or needs.  You should assess your financial position, personal objectives and needs before making a decision based on this information. 

1All options have out-performed their performance objectives over the 5 and 10 year horizons, with the exception of the Conservative option, which underperformed its objective by 0.28% over the 5 year horizon.
2 Past performance is not a reliable indicator of future returns.
3The performance history presented combines Spirit Super’s performance with that of MTAA Super (Conservative, Balanced and Growth options) and Tasplan (Moderate and Sustainable options). The Tasplan performance history is based on information provided to us by Tasplan and is provided for information only.
4 Bloomberg Global Aggregate Bond Index (hedged in AUD). Past performance is not a reliable indicator of future returns.
5 Bloomberg AusBond Composite All Maturities Index. Past performance is not a reliable indicator of future returns.
6 ASX All Ordinaries Accumulation Index. Past performance is not a reliable indicator of future returns.


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