legalsuper’s recent performance 
(for the Moderate investment option)

Because super is, for most people, a 20+ year investment, the investment performance of a super fund is most appropriately considered from a long term perspective.

Comments from legalsuper’s asset consultant on the state of investment markets

Share markets enjoy a much needed rally during March and this continued in April.

Announcing a new member benefit - fee capping

legalsuper has decided to reward the increased economies of scale that high balance members bring to legalsuper by capping administration fees at $1,000 for members with balances of $350,000 and higher.

Our new Government co-contribution calculator

Since its introduction in 2003 the popularity of the Government co-contribution scheme has increased each year.

Maximise your 2008/09 tax deduction by making personal super contributions

As the end of the financial year approaches it’s timely for self-employed practitioners to consider whether they are eligible for or have maximised their claim for a tax deduction for personal super contributions they have paid.

Recent changes at legalsuper and with super legislation

Andrew Proebstl, Chief Executive, was recently elected a director of the Australian Institute of Superannuation Trustees (AIST). This is the national not-for-profit organisation whose mission is to promote and protect the interests of Australia’s $450 billion not-for-profit superannuation sector.

legalsuper’s recent performance (for the Moderate investment option)

Because super is, for most people, a 20+ year investment, the investment performance of a super fund is most appropriately considered from a long-term perspective. Since our inception 20 years ago, in seventeen out of twenty years legalsuper has returned a positive return. In fact since legalsuper's inception in 1989 up to 31 March 2009 legalsuper's average return for the Moderate option has been 8.5% pa. $10,000 invested at inception would now be worth $51,300. The following chart shows legalsuper’s return over 20 years, putting our returns in a longer-term context.

While keeping in mind the long-term nature of your investment with legalsuper is important, we appreciate that some members, and especially those nearing retirement, may also be interested in how the fund has performed in the current financial year.

As you are no doubt aware, investment performance in the current financial year has been weaker due to the global financial crisis. In fact, all 105 super funds in the SuperRatings survey (for ‘Balanced’ investment options) reported a negative return for the financial year to 31 March 2009.

We can report that over three different periods (nine months, three years, and five years to 31 March 2009), legalsuper's default moderate option outperformed most other super funds. A chart that compares our performance with the SuperRatings all-fund median across these timeframes is shown below.

legalsuper's return compared to SuperRatings' all-fund median (9 months, 3 and 5 years ended 31 March 2009) ('Balanced' options):

It is also important to remember that history shows that eventually share markets bounce back and historically the performance of legalsuper has been stronger than most other super funds.

Comments from legalsuper’s asset consultant on the state of investment markets

Share markets enjoy a much needed rally

There was little improvement in the outlook for the World’s economic and financial systems during March. New economic indicators showed that the decline in activity continued, especially in developed markets and this has been accompanied by a downturn in world trade, with exports from manufacturing countries like Japan down 50% while German exports have also fallen sharply. This has also adversely affected the emerging market countries that have relied on export markets for a large part of their growth. As a counter to this gloomy outlook, Central Banks have continued to cut cash rates to historic low levels and governments are playing their part by announcing large spending programs aimed at supporting the consumer and also the banking system by purchasing some of the toxic loans on the bank balance sheets.

Share markets around the world enjoyed a good rally in March as some investor confidence returned. Australian shares rose by 8.1%, with small companies outperforming. The sectors that performed most strongly included financials, information technology and consumer discretionary. The banks have all risen strongly following the government guarantee offered on their borrowings, while the underlying businesses are performing strongly with improved margins. The recent period has been characterised by a surge in equity raisings with $32bn raised in the past six months to help recapitalise companies.

Global share markets were also stronger in local currency terms and the MSCI ex-Australia index rose by 6.5% in March. Unfortunately this was offset by a stronger $A which rallied 8.8% against the USD, on the back of renewed risk appetite and some recovery in commodity prices with the final result to unhedged global share investors being a small negative return for the month. As with the Australian market the most defensive sectors such as utilities and consumer staples underperformed while financials recovered somewhat after the battering they have taken in recent months.

North American shares in the USA and Canada both rose by 8.5%, while European markets were also stronger, although they lagged behind the USA. Emerging markets outperformed developed markets over the month with commodity exporters such as Russia (oil and gas) and South Africa (gold and base metals) leading the pack. Asian markets were also dragged higher on the back of a strong performance by China, which was boosted by a package of infrastructure spending.

Listed Property Trusts were flat in March and again underperformed shares. Although the banks are becoming a little more supportive to some entities, there continues to be uncertainty on others which are less likely to survive.

Bond market yields have been very volatile in recent weeks, but there was not much change over the month. Index returns showed a small positive return with global bonds outperforming Australian bonds as US Treasury and other government bonds yields fell in yield, compared to the more static Australian bond market where yields have been held up by the still higher cash rates.

The rally in shares continued into April, but economic conditions remain weak, and it is too soon to state that the bear market is over. It is likely that there will be further volatility in months ahead. There will be opportunities to buy cheap assets in months ahead but caution remains the watchword.

Announcing a new member benefit - fee capping

Our new Government co-contribution calculator

Maximise your 2008/09 tax deduction by making personal super contributions

As the end of the financial year approaches it’s timely for self-employed practitioners to consider whether they are eligible for or have maximised their claim for a tax deduction for personal super contributions they have paid.

To be eligible for a tax deduction for personal super contributions:

• any amount you earn as an employee must be less than 10% of your combined assessable income and reportable fringe benefits for the income year;
• you are less than age 75;
• you pay personal contributions prior to 1 July in the financial year you wish to claim a tax deduction;
• you pay contributions to obtain super benefits for yourself; and
• you have submitted a ‘notice of intent’ to claim a tax deduction for these contributions, and legalsuper has acknowledged your ‘notice of intent’ and the amount you intend to claim.

The amount of tax deductible contributions you can pay into super is capped at $50,000 per annum (for members up to 49 years of age) and $100,000 for members over 50 years of age. Contributions made above the cap are taxed at a higher rate.

Importantly, to be eligible for a tax deduction, contributions must be received by legalsuper up to 30 June 2009. Contributions can be paid by cheque, BPay or EFT.

To check your eligibility for a tax deduction and to find out how much you can contribute within the cap, thereby maximising your tax deduction, please call legalsuper on 1800 060 312.
 

Recent changes at legalsuper and with super legislation

Changes at legalsuper:

Super industry changes: