Early in the quarter we saw the continued spread of the Omicron variant of COVID-19, along with increasing inflationary pressures impacting investment markets. However, ongoing economic strength saw global share markets rally in December, with equities and property in particularly producing stellar returns for the calendar year, and providing a substantial boost to super balances.
Mercer SmartPath® members enjoyed total returns for the last quarter of 2021, between 1.9% and 2.9% and most saw their balance grow by double digits over the calendar year. Overall the superannuation industry’s median return for Default (MySuper) Options was 13.7%1, whereas the overwhelming majority of Mercer SmartPath members achieved impressive returns in excess of 15%. As a result, more than 87% of our SmartPath members continue to enjoy better than median1 returns over 1, 3, 5 and 7 year time frames.
Mercer Sustainable Plus investment options also performed well above industry standard with returns ranging from 1.3-4.7% for the December quarter. These returns are a particular standout as they’re in the top quartile for 1, 3 and 5 years in relation to other balanced investment options offered by other super funds.2
In addition, our diversified investment options performed well in line with their respective risk exposure, with performance of these options ranging from 1.5-4.0% for the quarter. In the longer term these options continue to perform well and are exceeding their investment objectives.
Investment market and economic update
2021 was a good year for global equities, largely driven by a rebound in company earnings as economies recover from the effects of the COVID-19 pandemic and lockdowns.
Australian shares also performed well, with the S&P/ASX300 Index returning 2.2% for the December quarter and 17.5% for the calendar year. Australian Listed Property in particular had a strong year, closing out 2021 with returns of 27%.
As lockdowns across Australia were lifted, economic and household consumption recovered, with the economic activity improving. We also saw further improvements in the labour market, with unemployment falling to 4.2%3.
House prices continued to rise4 and household savings rose to an estimated $200 billion by year’s end5, adding to consumer confidence. These savings will help further drive economic growth in 2022 and beyond.
Looking ahead to 2022
We remain optimistic about the investment market and economic outlook with most economists projecting further economic growth in 2022. Higher inflation does present a risk and we predict the recent years of strong performance by equities will moderate, and potentially become more volatile.
Our global team of 1,300 investment professionals will continue to seek out the best investment opportunities in Australia and around the world to help grow your super. They monitor investment markets on a daily basis - continuously working behind the scenes to ensure you stay on track for your retirement.
Read more investment updates
Investment update: July to September 2021
Mercer Super members enjoyed a modest positive result for the September quarter.
Investment update: April to June 2021
This financial year, SmartPath® members have enjoyed positive investment returns four quarters in a row - our best year on record.
Investment update: January to March 2021
Share markets have maintained broadly positive results since the December quarter, despite the volatility.
1. SuperRatings Fund Crediting Rate Survey December 2021 - Default Options
2. SuperRatings Fund Crediting Rate Survey December 2021 – Balanced (60-76)
3. Labour Force, Australia, December 2021 | Australian Bureau of Statistics
4. Residential Property Price Indexes: Eight Capital Cities, September 2021 | Australian Bureau of Statistics.
5. Commentary from Treasurer Josh Frydenberg - Australian households and businesses amass $200 billion in savings during COVID-19 pandemic – 9news article
This information is of general nature only and does not take into account your personal financial situation, needs or objectives. As we don't know your financial needs we can't advise if Mercer Super will suit you. Please consider the Product Disclosure Statement, Product Guide, Insurance Guide, and Financial Services Guide before making a decision about the product.