Investment insights - January to March 2024

Daniel Selioutine - 29 May 2024

Exploring Super podcast

Catch up on our investment update via podcast, with the latest edition of Exploring Super.

Daniel Selioutine (Group Executive, Investments) provides economic and market commentary for the January to March 2024 period.

Market performance

The first quarter of 2024 saw a strong rally in developed market equities as global growth outperformed expectations. Market optimism surged as broadly positive economic indicators were interpreted as lowering the likelihood of an economic recession in the USA.

Market performance

The first quarter of 2024 saw a strong rally in developed market equities as global growth outperformed expectations. Market optimism surged as broadly positive economic indicators were interpreted as lowering the likelihood of an economic recession in the USA.

The strength in economic activity and a slight increase in inflation prompted the USA Federal Reserve to temper the market's expectations of rate cuts in the immediate term. The resulting shift in interest rate expectations resulted in negative returns from global bond investments.

USA equity markets reached new highs during the March 2024 quarter despite elevated interest rates. Price gains were broad based across most equity sectors, however, Information Technology stocks benefitted particularly from positive sentiment surrounding Artificial Intelligence. Future share price performance will depend in part on company earning beating optimistic investor expectations.

Domestically, the Australian share market underperformed global markets because of weaker iron ore and gas prices as well as a lack of Technology stocks on the Australian stock exchange. Unlike the USA, Australian households are more sensitive to short-term increases in interest rates, with retail sales and consumer confidence weakening over the quarter.

Inflation remaining "sticky" (i.e. taking longer than expected to decrease) has increased the risk of interest rates remaining higher for longer, which in turn increases the possibility of slowing economic growth.

Accumulation Plan performance

The performance of Accumulation Plan investment options (compared to their equivalent SuperRatings* median fund) in the table below shows that their three-year performance against inflation objectives remains challenged but has improved as inflation has gradually declined.

ESSSuper Accumulation Plan investment option performance:
Three years to 31 March 2024 (net of tax, net of fees)

Cash option returns are depicted against the median SuperRatings Cash option. Defensive option returns are depicted against the median SuperRatings Secure (0-19) option. Conservative and Balanced option returns are depicted against the median SuperRatings Capital Stable (20-40) option. Growth option returns are depicted against the median SuperRatings Conservative Balanced (41-59) option. Ethically Minded and Basic Growth option returns are depicted against the median SuperRatings Balanced (60-76) option. High Growth option returns are depicted against the median SuperRatings Growth (77-90) option. Shares Only option returns are depicted against the median SuperRatings High Growth (91-100) option.

* SuperRatings is a third party superannuation research company providing data analysis, information and commentary to both the public and the superannuation industry. Refer to superratings.com.au for more information. Ratings are only one factor to be taken into account when choosing a super fund.

Emergency Services Superannuation Board (ABN 28 161 296 741) (ESSB), the Trustee of the Emergency Services Superannuation Scheme (ABN 85 894 637 037) (ESSSuper).

This investment commentary does not constitute advice. Investment returns cannot be guaranteed as investment markets can be volatile. As a consequence, returns can be positive or negative. Past investment performance is not a reliable indicator of future performance.

Benefits in ESSSuper's Accumulation Plan, Income Streams and Beneficiary Account products are not guaranteed or underwritten by the Victorian Government or ESSSuper, and ESSSuper does not come under the jurisdiction of the Australian Financial Complaints Authority (AFCA).

The information contained in this update is of a general nature only. It should not be considered as a substitute for reading the relevant ESSSuper Product Disclosure Statement (PDS) that contains detailed information about ESSSuper products, services and features. Before making a decision about an ESSSuper product, you should consider the appropriateness of the product to your personal objectives, financial situation and needs. It may also be beneficial to seek professional advice from a licensed financial planner or adviser. An ESSSuper PDS is available at esssuper.com.au/pds or by calling 1300 650 161.