Currency play helps 2014/15 returns

REST has lauded the contribution of unhedged international equities to its 9.47 per cent return over the past year for its MySuper Super Core Strategy fund.

Damian Hill, chief executive officer of REST Industry Super, said international equities is the fund’s largest weighting and was the strongest performer over the past year.

“The depreciation of the Australian dollar boosted returns from unhedged international equities, and other asset classes – infrastructure, property, alternative investments and bonds – also contributed,” he said.

In a message to members, Hill said he expected short term volatility ahead and that the fund would remain vigilant to downside risk over this period.

The fund is preparing for this volatility by trimming its allocation to shares in favour of yield-based assets and absolute return investments, but also maintaining a bias to overseas shares relative to Australian shares and an above-benchmark foreign currency exposure.

A week ago AustralianSuper reported returns of 10.86 per cent for its MySuper fund after taxes and fees.

It similarly attributed its relative success to “reasonable” returns from US, European and Japanese equity markets boosted by the strength of foreign currencies against the Australian dollar.

It also cited the growing success of its diversification into unlisted property and infrastructure assets.

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Geopolitical risks rewire asset allocation ‘operating system’: GIC

Some investors are “missing the point” of geopolitical risks by equating them to the disruptions from conflicts and wars, according to GIC chief economist Prakash Kannan, but in reality, geopolitical risk is no longer episodic or peripheral. This means investors need to think harder about inflation and country composition in their portfolio.

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