Support for you in these uncertain times.
Investment markets have largely recovered from the COVID-19 related market volatility of March 2020. However, life remains far from normal.
Measures to protect community health, especially in some of our largest cities, are still implemented, when required, and we’ve all become accustomed to government support programs to assist the people impacted. While the extreme market volatility of last year has faded, the investment environment is complicated.
That’s why we have this space to keep you informed with investment news and insights, government support measures, and more.
As always, if you’re worried about money, we encourage you to seek financial advice. At MLC, we’ve been helping Australians obtain financial security for over 130 years. Reach out to us if we can help.
There’s no such things as a ‘one-size-fits-all’ answer on what the best thing to do is.
As a generalisation, people close to retirement or in retirement often have many years ahead of them. In those situations, having some exposure to ‘growth assets,’ like shares, is important as their higher return potential, can help to maintain people’s spending power. But having growth assets like shares in your retirement portfolio may expose you to increases in value but it also exposes you to market falls like the ones we saw earlier this year. The more you invest in growth assets the greater the fluctuations in your capital.
Yet the more stable investments tend to have much lower returns. Take term deposits for example, they may provide relative stability in your capital value but the low interest rates payable on term deposits over the past decade have certainly made it harder for people nearing retirement or in retirement to rely on them to keep pace with the cost of living.
When investing, you need to be prepared for all sorts of outcomes. Understanding the level of fluctuations your investments may experience will help you be prepared for changes when you’re drawing a pension from your superannuation.
MLC offers a range of portfolios with varying risk and return characteristics to suit different needs.
We recommend you discuss your situation with your financial adviser who can help you choose the right investments for your personal requirements. There are also a range of investment, tax, social security and lifestyle strategies that may help you adapt your strategy as you progress through your retirement. If you don’t have a financial adviser, please call us.
MLC Asset Management, the manager of MLC, has been managing Australians’ savings since 1985, and are applying all their knowledge, experience, and skill to both defend the value of our clients’ investments from the worst effects of market falls and to also position them to benefit from the recovery that will eventuate.
Although share markets have regained a large portion of the ground they lost in March, there’s still so much economic and business uncertainty. This being the case, we continue to manage portfolios with an intensive focus on risk-management.
Consistent with this, we’ve been increasing exposure to investment-grade US corporate bonds. A corporate bond is a type of fixed income investment that is issued by a company. The company gets the capital it needs and in return the investor is paid a pre-established number of interest payments at either a fixed or variable interest rate.
Corporate bonds are generally regarded as being less risky than shares.
We have also been relying on derivative strategies to participate in share markets. Through derivatives, we can hedge against downside risks while also capturing some of the upside when markets rise.
Some of the key indicators our investment experts at MLC Asset Management are watching include:
As events unfold our investment experts continue to evolve the potential scenarios that could unfold, and adjust the positioning of MLC’s multi-asset portfolios to either improve potential returns or reduce risks.
Yes, the buy-sell spreads of some managed investments are fluctuating daily due to current market conditions. Any changes to fees and costs are updated regularly and can be viewed at mlc.com.au/buysellspreads
For MasterKey investments and MLC Wrap and Navigator products, you should first speak to your financial adviser. You can also refer to the fund manager’s website as well as the information contained in the investment’s PDS which is issued by the fund manager.
Buy-sell spreads are linked to transaction costs within a fund.
When investors deposit or withdraw money from investment products they are in turn creating costs for the fund. For example, the brokerage costs involved in buying or selling shares for the fund.
The buy-sell spread ensures that these costs are incurred only by unitholders who transact. MLC and the fund managers don’t profit from these spreads.
Buy-sell spreads can change and are often higher when markets are volatile—as they are today.
An increase in the buy-sell spread will increase the cost associated with selling or switching an investment and may also be reflected in a lower valuation of the investment.
Buy-sell spreads are located within the investment menu of the products PDS (Product Disclosure Statement) for MasterKey. However, given that fund manager buy/sell spreads are changing on a frequent basis we’ve made this information available on mlc.com.au/buysellspreads so that you have the most up-to-date information. Please check the buy-sell spreads on this page before transacting.
For the latest available information on your MLC Wrap & Navigator investment options, as well as MLC MasterKey Investment Service Fundamentals and external options in MLC MasterKey Investment Service, please speak with your adviser or check the underlying Fund Manager’s website and PDS for the most up-to-date information on fees and costs before transacting.
If you’re invested in a MLC MasterKey Superannuation or Pension product, you’re likely to hold an investment in one of MLC’s many multi-asset portfolios offered. If this is the case, you may have some exposure to unlisted assets. Private equity is one of the main unlisted assets in MLC portfolios. Our investment experts at MLC Asset Management, who are responsible for managing our MLC investment options, include private equity in portfolios because they believe:
Private equity is a relatively small component of MLC Horizon and Inflation Plus portfolios with the rest invested in assets that are listed on a public market like the share market or bond market. Listed asset classes are valued on a market and their values incorporated into unit prices each day. That’s one of the reasons your account value changes from day-to-day. Private equity is valued a lot less frequently because it’s invested in private companies.
MySuper has private equity and some additional investments in unlisted property.
All asset classes have been affected by COVID-19, including unlisted assets. Private equity is one of the main unlisted assets in MLC’s multi-asset portfolios.
MLC Asset Management conducted an out-of-cycle revaluation of private equity assets, which resulted in a reduction to private equity values in early April. This has had a flow-on effect to certain multi-asset portfolios with decreases in investment option unit prices ranging from 0.14% to 1.39%. The lower the allocation to private equity, the less the impact on the unit price.
The private equity revaluation ensured that asset values were fairly reflected in unit prices for any members choosing to switch, add to, or redeem monies in affected investments, and thereby protected the interests of members. It was included in the unit prices of our investment options and is reflected in account balances.
MLC Asset Management continues to monitor investment markets closely to ensure the pricing of unlisted assets remains appropriate for the circumstances as they evolve and to ensure all investment values reflect ‘fair value’ across all member account balances.
You can find out about the Government’s support packages for individuals and households here.
MLC is aware of COVID-19 themed emails and text messages circulating which contain malicious software, lead to phishing sites or asking you to donate money to a bank account.
The emails and text messages may purport to be from legitimate organisations, including government agencies, and request you to click on links, open attachments or donate money to a bank account. Please see two examples below.
If you have clicked on links or attachments in a suspicious email or SMS, or sent funds based on a request received from a suspicious email please call MLC on 132 652.
If you receive a suspicious message, do not click on any links or attachments. Please forward it to firstname.lastname@example.org and then delete it.
You can also read our article for more information on investment and super scams, or visit the Federal Government's Australian Cyber Security Centre website for more information about COVID-19 related scams.
This information is current as at April 2020.
MLC is aware of current scam phone calls targeting Australians. The caller may claim to be from an organisation that can assist you to get early access to your superannuation. The caller may ask for your personal and superannuation details.
If you ever have any concerns as to the legitimacy of a call, hang up and call the company back on a publicly listed number.
If you have received this type of call and have provided information about your superannuation, please contact MLC immediately on 132 652.
If you receive a text message saying your superannuation fund is going to release your super, and you did not request this, contact us.
If you have provided personal or banking details, please also contact your financial institution.
This information is current as at May 2020.
We appreciate the impact of events like these can be unsettling, and that everyone’s situation is different. We recommend you discuss your investment approaches with your financial adviser. If you do not have a financial adviser, please call us.