How your super performed in the second quarter of 2024
by Verve
Here’s everything you need to know about what’s happening with global markets, the investment world and what your money has been up to in the second quarter of 2024.
Sustainable investing boosts performance
In July we announced that your super delivered 9.93% annual return, having been given a performance boost by not investing in fossil fuel companies, which dragged other investment funds down – SuperRatings estimated that the median balanced super fund return for the year was 8.8%.
In fact, financial analysis showed that fossil fuels have been dragging investments down for as long as 10 years! Plus, keeping money out of fossil fuels and other harmful industries gives us more space to invest in other growth areas such as healthcare, social enterprise and renewable energy.
Tech continues to boom
This quarter, the upwards trend across global shares rode out persistent inflation. The US economy is doing better than expected, thanks to strong performance from tech giants like Nvidia, Apple, Meta and Tesla, which helped propel America’s two largest stock market indices – the S&P500 and the Nasdaq – to all-time highs.
This continued to bolster your fund’s performance against uncertainty, although the fact that one sector is propping up the rest could signal potential fragility.
The big picture
It’s a big election year globally. Unexpected election results tend to impact markets. Both the close-run snap election in France and President Biden’s withdrawal from the upcoming US election race have been making waves in the markets.
This volatility reflects the market’s attempt to anticipate central bank policy moves and the impact on interest rates. The ongoing market volatility is largely driven by speculation surrounding the US Federal Reserve Bank’s future actions on rates, with predictions fluctuating between one to two cuts.
We’re starting to see interest rates stabilise in the US and even start to fall around Europe, but things have been less rosy here in Australia lately, where energy and materials sectors have been lagging.
Australia is the only G10 nation where inflation has increased, raising the spectre of further RBA rate hikes. This is not great news meanwhile for anyone with a mortgage or other debt, leading to the Aussie property boom starting to pull back after an exceptional run, and consumer spending start to dampen under the weight of household debt burdens.
When we look at investments, we monitor these market indicators to gauge its trajectory and assess the balance between potential risks and returns.
Boosts from Aussie healthcare
Our domestic healthcare technology sector has seen some star performers over the past year, including Pro Medicus’s cutting-edge medical imaging platform and Polynovo’s revolutionary synthetic skin that’s helping burn victims and other patients in need of reconstructive surgery. Shares in Melbourne-based cancer diagnostics firm Telix have also been giving good returns, thanks to high demand for its prostate cancer imaging service.
Verve Super’s exposure to all these strong performers has helped buffer us against sociopolitical and economic uncertainty.
Fuelling sustainability
Among the international shares in your super is a Danish sustainable energy producer called Vestas. Known mainly for making recyclable wind turbine blades, they did have some interesting news this quarter: they’ve been piloting a Sustainable Aviation Fuel made from bio-waste materials such as used cooking oil or tallow. This helps reduce greenhouse gas pollution and makes air travel more sustainable.
So how does a sustainable energy business use aviation fuel? They use it in the helicopters needed to take personnel out to wind turbines in the Baltic Sea. Adding sustainable fuel to the tanks is cutting carbon emissions per flight by around a third, helping Vestas along its path to being carbon neutral by 2030.
The numbers
Verve Super’s Balanced Strategy returned:
Past performance is not a reliable indicator of future performance.
