| Comment |
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Year in Review 2007/08
The 2007/08 financial year which ended on 30 June 2008 has been an extremely difficult one for investors, not only in Australia, but across the globe.
Fears of rising inflation, led by record high oil prices, together with concern of a slowing world economy and turmoil in global credit markets, has seen financial markets go into decline, and therefore investors’ returns plunge into negative territory.
Through all this the Australian economy has provided mixed signals.
On one hand, there has been strong growth on the back of a boom in the prices Australia receives for the commodities it exports (eg. iron ore, coal, oil and gas, and other metals).
On the other hand, the year saw four (4) interest rate rises as the Reserve Bank attempted to curb inflation, coupled with a soaring $A. These and spiralling raw material and labour costs made for tough business conditions.
China and India continue to drive the strong resources boom, but there is growing concern of a possible recession in the US and a significant slowdown in other Western economies.
On financial markets, the Australian share-market recorded its biggest fall in 26 years, with the S&P/ASX 200 (Standard & Poor/Australian Securities Exchange - an index measure of the market’s performance) down 16.9% over the year.
The MSCI (Morgan Stanley Capital Index - a measure of the world’s major share-markets) fell by 21.5% over the 12 months.
As a result of this turmoil, in Australia the vast majority of members of superannuation funds have seen returns averaging around -7.0%. Obviously Tasplan has not been immune from these conditions.
Sub-prime mortgages
At its simplest, sub-prime lending can be described as high-cost lending, or the practice of providing home loans to borrowers who don’t qualify for the best market interest rates, because of their deficient or adverse credit history. Generally, sub-prime borrowers are low-income applicants, which makes sub-prime lending risky for both home loan lenders and borrowers for lenders, because people with poor credit histories are involved, and for borrowers, because they may financially commit to a mortgage that's beyond their means to repay. Due to the risk, sub-prime home loans are usually offered at a higher interest rate. Many of the sub-prime mortgages have special honeymoon rates (low interest rates for the first one or two years). When the honeymoon period expires, these mortgages then move to the higher variable interest rate. According to a survey by the Credit Suisse Group, more than 30 per cent of sub-prime borrowers, now staring down the prospect of a higher variable rate, won't be able to meet the monthly payments, and in fact many are already behind on payments for the current honeymoon rate.
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Investment performance year-to-date
Tasplan sets monthly interim crediting rates for each investment option, based on actual performance in that month.
Interim rates will apply to members who have their benefit paid, or who switch investment options, during the year.
It takes 3-4 weeks after the end of each month to confirm interim crediting rates, due to the time involved in receiving and analysing reports from each of our investment managers.
Monthly investment performance for the 2008/2009 financial year is listed in the table below.
Tasplan Super
|
Equities
Option
|
Longer Term
Growth Option
|
Balanced
Option
|
Short Term
Defensive Option
|
Cash
Option
|
| Monthly figures |
| July 2008 |
-2.57%
|
-1.76%
|
-1.06%
|
-0.04%
|
0.53%
|
| August 2008 |
3.79%
|
3.22%
|
2.51%
|
1.70%
|
0.59%
|
| September 2008 |
-7.78%*
|
-6.08%*
|
-4.23%*
|
-1.52%*
|
0.52%*
|
| Year-to-date figures |
| July 2008 September 2008 |
-6.7%*
|
-4.8%*
|
-2.9%*
|
0.1%*
|
1.6%*
|
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Taspension
Pension Option Returns for the Period (pre tax, post fees)
|
Equities
Option
|
Longer Term
Growth Option
|
Balanced
Option
|
Short Term
Defensive Option
|
Cash
Option
|
| Monthly figures |
| July 2008 |
-2.71%
|
-1.86%
|
-1.10%
|
0.02%
|
0.62%
|
| August 2008 |
4.13%
|
3.54%
|
2.78%
|
1.92%
|
0.69%
|
| September 2008 |
-8.37%*
|
-6.59%*
|
-4.57%*
|
-1.61%*
|
0.61%*
|
| Year-to-date figures |
| July 2008 September 2008 |
-7.2%*
|
-5.1%*
|
-3.0%*
|
0.3%*
|
1.9%*
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Tasplan's financial year-to-date returns are detailed in the following table and graphed below.
These figures reflect the investment returns earned by the Plan's assets, year-to-date, during this financial year. (Note that there may be a small variance between the sum of the monthly rates and the year-to-date figure due to the impact of compound interest on monthly returns. Final rates for the year will be declared in August.)
Returns Financial Year to 30 September 2008*
Please Note: Members may receive slightly higher or lower returns than these figures depending on the timing of cashflows, end of year adjustments and processing of transactions by the administrator. Past investment returns are not necessarily an indication of future earnings. Final rates for the year will be declared in August.
Investment performance
Tasplan has been a consistently strong performer since our inception in 1987. The table below shows how we have performed each year.
Note that the Short Term Defensive and Longer Term Growth Options only commenced on 1 July 1999.
From 1 July 2002, two more investment options were introduced the Equities and Cash Options.
| Investment year |
Crediting rate %
|
| 2007/2008 |
Equities Option |
-12.9
|
|
Longer Term Growth Option |
-10.1
|
|
Balanced Option |
-5.8
|
|
Short Term Defensive Option |
0.1
|
|
Cash Option |
7.1
|
| 2006/2007 |
Equities Option |
19.7
|
|
Longer Term Growth Option |
17.4
|
|
Balanced Option |
14.7
|
|
Short Term Defensive Option |
9.0
|
|
Cash Option |
5.4
|
| 2005/2006 |
Equities Option |
20.3
|
|
Longer Term Growth Option |
17.7
|
|
Balanced Option |
14.4
|
|
Short Term Defensive Option |
8.4
|
|
Cash Option |
5.6
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| 2004/2005 |
Equities Option |
15.8
|
|
Longer Term Growth Option |
12.9
|
|
Balanced Option |
11.9
|
|
Short Term Defensive Option |
8.6
|
|
Cash Option |
4.5
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| 2003/2004 |
Equities Option |
19.1
|
|
Longer Term Growth Option |
16.0
|
|
Balanced Option |
12.7
|
|
Short Term Defensive Option |
6.9
|
|
Cash Option |
3.9
|
| 2002/2003 |
Equities Option |
-7.3
|
|
Longer Term Growth Option |
-5.3
|
|
Balanced Option |
-1.9
|
|
Short Term Defensive Option |
3.9
|
|
Cash Option |
5.4
|
| 2001/2002 |
Longer Term Growth Option |
-5.2
|
|
Balanced Option |
-2.6
|
|
Short Term Defensive Option |
2.0
|
| 2000/2001 |
Longer Term Growth Option |
10.1
|
|
Balanced Option |
8.1
|
|
Short Term Defensive Option |
6.5
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| 1999/2000 |
Longer Term Growth Option |
13.4
|
|
Balanced Option |
12.7
|
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Short Term Defensive Option |
9.2
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| Investment year |
Crediting rate % |
| 1998/99 |
8.0
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| 1997/98 |
10.0
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| 1996/97 |
18.0
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| 1995/96 |
9.25
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| 1994/95 |
5.5
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| 1993/94 |
6.5
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| 1992/93 |
8.0
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| 1991/92 |
10.0
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| 1990/91 |
10.0
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| 1989/90 |
17.0
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| 1988/89 |
19.0
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| 1987/88 |
18.0
|
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Links to related articles:
Member investment choice
Where your money is invested
Investment policies |