The assets driving Rest’s FY22–23 performance

Rest has outlined the asset classes that drove returns for the financial year 2022–23 as it details its investment performance.

Its default MySuper Core Strategy option returned 9.2 per cent over the financial year in what the fund described as a “challenging year for investing”.

The Core Strategy option has a 73 per cent in growth assets and 27 per cent in defensive assets and is part of the SuperRatings SR50 Balanced (60–76) index.

Over 10 years, the Core Strategy option has delivered 7.2 per cent per annum.

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Positive performance during FY22–23 came mostly from overseas shares, agriculture, and Australian shares.

On the other hand, listed infrastructure, global listed property, and unlisted property as well as private equity all detracted from performance. These ranged from losses to 5.6 per cent for private equity to 4 per cent for unlisted property that Rest attributed to their interest rate sensititivity.

However, unlisted infrastructure was a contributor to performance, contributing 9.5 per cent, as it delivered steady resilient returns from airports returning to pre-pandemic travel levels.

“We can see that the positive performers are asset classes that have navigated higher interest rates and strong growth. Generally, the weaker performers are those that are more exposed to rising rates and higher inflation,” it said. 

“Even within the asset classes, we also saw a range of returns. US ‘mega-tech’ stocks drove market performance (S&P 500) over the final six months, benefiting Rest’s portfolios holding overseas shares, as excitement and optimism grew around the potential for artificial intelligence (AI). Australian shares also performed well over the year, driven by demand for resources.”

Looking ahead to the new financial year, it said it is finding investment options as the risk of a downturn in Australia falls away.

“We believe the risk of a serious downturn in Australia is starting to fall. However, as some investment opportunities may already have the downturn risk factored into their prices, they may therefore present a buying opportunity. Put simply, certain cheaper assets (for example, some discretionary retail companies) are starting to look more attractive as we position our portfolios for the future,” it said.