Future Super Q1 Performance
The big picture
The first quarter of 2024 brought good news for investors, and even better news for ethical and socially responsible funds like Future Super.
In March, stock markets globally reached all time highs. The growth this quarter was led by the largest technology companies in the world, which continued to lead market gains as investors remained confident in the earnings growth from these companies.
Socially responsible and ethical funds, like Future Super, generally outperformed their peers without ethical screens in place over the quarter.
What contributed to performance
The largest contributing factor to Future Super’s performance this quarter was our exposure to the technology sector within international share allocations.
How does that work? Well, thanks to our screens we exclude a lot of stuff - like weapons, tobacco, gambling and fossil fuel companies. The money that other investors might have allocated to those industries, we have to put elsewhere. That’s why we end up with a larger portion of our portfolios invested in the technology sector than an investor without ethical screens in place might have.
Nvidia was one of the top performers in international shares - it’s a technology company which specialises in artificial intelligence. The company’s stellar performance this quarter was driven by the ongoing AI boom alongside its data centre business experiencing a wave of growth.
Our Australian shares portfolio performed well this quarter too, with a few stand out companies delivering great results.
First, a company Future Super screens out was a good news story for us. Mining giant BHP’s share price fell by about 12% in the first quarter of 2024.
BHP is actually the largest listed company in Australia, and that’s important to investors because the size of a company generally impacts what portion of a portfolio you invest in that company.
We don’t invest in BHP because part of its business is in coal, so it doesn’t pass our screens. That was positive for us this quarter, as our Australian shares performance wasn’t dragged down by the biggest company on the ASX having a bad quarter.
Meanwhile, Brambles had a strong quarter. Brambles is a supply chain logistics company listed on the ASX, operating in 60 countries. It’s one of the companies making sure supermarket shelves are stocked.
One thing we like about Brambles is it’s part of the circular economy. Brambles provides pallets, crates, bins and containers to all kinds of businesses. But it’s developed a way of sharing and reusing those resources to minimise its environmental impact.
Other strong performing companies in Australian shares were Suncorp, a bank and insurer which has committed to not investing in or funding new fossil fuel projects, and freight software provider Wisetech.
Your money having impact
Your super isn’t only invested in shares, it’s also invested in what we refer to as alternative assets. These assets include things like infrastructure and are opportunities that are generally only available to institutional investors, like super funds.
One Future Super investment in this category is the Kilter Agriculture Fund. This fund invests in over 7000 hectares of farmland in Australia’s food bowl, the Murray-Darling region.
The fund aims to build value in the land it invests in by working to improve soil quality, prioritising water security through irrigation systems, optimising farm layouts for climactic events and using technology to boost efficiency. It also focuses on emissions reductions and scaled C02 sequestration.
The fund aims to deliver impact by prioritising biodiversity too, including protecting the more than 60 threatened species identified in the region.
Future Super has about $2.8 million invested in this fund (as at March 2024), and if you’re in Renewables Plus, High Growth or Balanced Impact you have exposure to this investment.
Looking ahead
Despite the strong start to 2024, Future Super’s investment team does expect market volatility to remain elevated for the rest of the year.
Market volatility refers to the extent that prices move up and down over a short period. We remain aware of volatility due to some uncertainty which surrounds the current economic backdrop.
This uncertainty is driven by slowing economic growth globally, stubborn inflation (a.k.a the high prices you’re seeing everywhere) and interest rate uncertainty. Another factor is evolving geopolitical risks around the world.
Future Super doesn’t invest in fossil fuel companies, and one economic consequence of conflicts - including the current conflict in the Middle East - is spikes in the price of oil.
All of these big issues can impact the investment mix that makes up your super in different ways, so our team monitors these factors.
Performance
Past performance is not a reliable indicator of future performance.