Investment Performance

Market overview as at 31 December 2020

Share markets performed well in the last quarter of 2020, with November seeing the bulk of the gains in the wake of the US Presidential Election and with news of three separate Covid-19 vaccines. US and European shares rose by more than 12% and 11% respectively, while the Australian share market outperformed, delivering a return of 13.7% for the quarter. The Australian dollar was stronger overall but against the US dollar in particular, rising by over 7% to 77 US cents. Bond markets were mixed depending on region, but the Australian bond market was down 0.1% for the quarter.

Vaccines and the US Election

Positive news on the vaccine front triggered a wave of optimism during November. Stocks that had previously underperformed such as the bank and energy sectors rallied (the Australian energy sector gained 28.5% in the month) on the back of the positive news for a rebound in economic growth, in part driven by the 27% rebound in the price of oil.

The US Presidential Election was the other major development over the quarter, but despite the drawn out process of finalising the ballot count, investors overall reacted favourably to news of Biden’s win. In early January, two Senate seat wins for the Democratic Party, gave the party control of both the House of Representatives and the Senate and this was also taken positively by investors. Passing new legislation should now be considerably easier for the Biden administration, and should result in further stimulus for the US economy. The prospect of higher corporate taxes also becomes more likely, but for the time being, the resilience of global equity markets indicates that investors aren’t too concerned just yet.

Stimulus packages provide a boost

The passing of a nearly $900 billion USD stimulus package in December provided an unexpected tailwind as the year came to an end, as many investors had been sceptical as to whether a stimulus bill could be agreed by the Republicans and Democrats. Among other measures, the package allows for $600 USD payments for individuals (which are reduced for higher income earners), as well as support for businesses. These measures may be helpful in jump-starting the economy, but with unemployment still over 6% (although down considerably from the middle of 2020), the risk is that too many payments will be saved rather than spent. Nevertheless, the US economy has continued to perform well, with the fall in unemployment being accompanied by an increase in manufacturing activity to a rate not seen since 2018.

December also saw Europe move closer to a €750 billion stimulus package, part of a €1.85 trillion budget for the period from 2021 to 2027. Investors welcomed the news that the European Central Bank had decided to increase the scale of its intervention in fixed income markets by €500 billion, bringing the total size of the pandemic emergency purchase programme to €1.85 trillion. This boost in government spending should help markets stabilise over the first quarter of 2021, which is especially important as the pandemic continues to spread, despite the rollout of various vaccines. It’s expected to take a number of months before the impacts of the vaccines start to make a meaningful impact on the spread of the virus, so government actions remain critical to helping individuals and businesses get through the current lockdowns across Europe and the UK in the short term.

Australian economy rebounds

The Australian economy has continued to recover well. The combination of the Reserve Bank of Australia cutting the official interest rate to an all-time low of 0.10% and the injection of further liquidity through the provision of cheap loans to banks in the hope of stimulating business recovery, should provide support into the future.

The Australian economy grew by 3.3% in the September quarter, beating expectations from most economists and officially signalling the end of Australia’s first recession in almost 30 years. Despite this good result, there is still a lot of work to be undertaken by the government to boost employment and get the economy back to where it was before Covid-19. The recent cluster and lockdown in Sydney’s Northern Beaches and Inner West are reminders of how quickly things can change. However, the Australian economy remains in good shape compared to the rest of the world and we remain optimistic that through good management of the virus the Australian economy can continue to grow throughout 2021.

EISS Super

Performance History

1 mth (%) 3 mth (%) FYTD ** 1 yr % (pa) 3 yr % (pa) 5 yr % (pa) 7 yr % (pa) 10 yr % (pa)
*Please note prior to 18 November 2019 the EISS Super default MySuper investment option was the Conservative Balanced option
**FYTD means Financial Year to Date starting 1 July.

EISS Pension

Performance History

1 mth (%) 3 mth (%) FYTD * 1 yr % (pa) 3 yr % (pa) 5 yr % (pa) 7 yr % (pa) 10 yr % (pa)
*FYTD means Financial Year to Date starting 1 July.

Retirement Scheme

Performance History

1 mth (%) 3 mth (%) FYTD * 1 yr % (pa) 3 yr % (pa) 5 yr % (pa) 7 yr % (pa) 10 yr % (pa)
*FYTD means Financial Year to Date starting 1 July.