Investment perspective: implications of current geopolitical events on your retirement savings

As your superannuation benefit provider, we appreciate that you may be concerned about how current geopolitical events may impact your retirement savings.

The situation in Ukraine is a humanitarian catastrophe and impacting millions of innocent lives. This article just sets out how we are mitigating its impact on your investment portfolios.

Firstly, CSC investment portfolios have very little direct exposure to Russian and Ukrainian investments (less than 0.18% of our total funds under management)¹:

• The majority of this exposure represents holdings included in the Australian superannuation regulator’s international share benchmark².
• The remaining, smaller exposure represents actively-managed investments in debt securities – these are overseen by skilled investment managers very experienced with the region.

Secondly, we seek to manage the risks within our investment portfolios pro-actively, so that we are positioned ahead of an event unfolding.

• In December 2021, we had made the assessment that the payoff to investing in some risky assets was deteriorating with the prospect of higher interest rates in the US and elsewhere; heightened energy-security risks in Europe; and ongoing supply-chain restrictions, potentially exacerbated by any escalation in the Russia/Ukraine tensions.
• We therefore entered the year with some additional defence in your portfolios. This meant that while equity markets have fallen by -7.7% over the year to date, CSC portfolios have recorded much smaller recoverable-losses to date³  (eg. -3.1% in PSSap Balanced MySuper option)⁴.
• Over the last 12 months to January 2022, our PSSap MySuper Balanced, Aggressive and Income-focused options all delivered stronger investment returns than other superannuation funds, resulting in our Top quartile ranking in the SuperRatings peer universe. This reflects our investment philosophy to limit losses when markets fall while capturing most of the gains when markets rise. Similarly, using the SuperRatings peer universe benchmark, we avoided 40% of losses compared to peers during the pandemic induced volatile period around March 2020.

We continue to monitor the situation as it unfolds, with particular focus on the potential implications of this conflict for global growth and inflation, and thereby, the value of investable assets globally.

We seek to protect your savings ahead of market falls, as well as capture profits in high quality assets to continue growing your retirement savings.

Read our media release for more information about our divestment from Russian investments.

For more information on our proactive risk management, including scenario analysis, visit:

• Risk management and governance
• How we invest to achieve your financial goals

¹ As at 22 February 2022.

² APRA’s Your Future Your Super annual performance test assesses superannuation funds against specific benchmarks. For international shares, the benchmark is MSCI All Country World ex Australia Index with Special Tax.

³ Past performance is not necessarily a guide to future performance. No matter how skilled the investment manager is or how strong performance has been in the past, there’s always a chance you could receive less than you invested.

⁴ Source: MSCI All Country World ex Australia Index AUD Hedged. As at 28 February 2022.