Funds Update

Market Review

While the major financial markets posted yet another quarter of solid returns to 30 June 2007, since then, world markets have endured substantial volatility as concerns continued to mount over deterioration in US sub-prime and corporate debt markets. In light of this, it’s important to remember that markets move in cycles. Generally speaking, the longer-term nature of superannuation investments means short-term volatility is not likely to have a significant impact on your super if you remain focused on your long term goals.

What happened during the June quarter?

• The Australian equity market rose 5.6% during the June quarter, driven by strong Gross Domestic Product (GDP) growth, subdued inflation numbers and continued high commodity prices.

When it comes to your superannuation, the best strategy is to stay focused on the long-term.
• The S&P/ASX 300 Resources index posted an outstanding gain of 15.5% during the June quarter, benefiting from rising energy, oil and coal prices. Resource-driven currencies, such as the Australian, NZ and Canadian dollars, were also top performers over the quarter.

• During the month of June, global developed markets fell 3.2% (in $A terms) due to mounting concerns surrounding the US sub-prime housing market. However, figures for the quarter show global markets were up 5.9% thanks to robust growth and continued merger and acquisition activity.

• In Australia small cap stocks outperformed their larger cap peers over the past 12 months and this theme continued throughout the June quarter. Australian small caps rose 10.8%, largely due to gains in the resource sector.

• Australian Listed Property Trusts lagged behind the broader equity market by 3.1% returning 2.5% for the June quarter. The Listed Property Trust market was negatively impacted by rising bond yields both in Australia and the US.
 
Understanding market volatility
If you would like to know more about the impact of market volatility, read our Market Volatility Fact Sheet.

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