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Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Alphinity Investment Management portfolio manager Elfreda Jonker reveals how portfolios should be placed considering the uncertain times we live in.

Investment style

The Motley Fool: How would you describe your duties to a potential client?

Elfreda Jonker: I am the client portfolio manager at Alphinity Investment Management. I am responsible for creating Alphinity’s content and really looking after our clients from a client queries perspective, or really just sitting as the middle man between the portfolio managers and the client base, ensuring that our clients get the best service from Alphinity. 

But I do work very closely with both our Australia and global teams to ensure that I know what’s going on in the portfolios and I represent the fund to clients generally doing presentations and so forth.

Alphinity is an active equity fund manager based in Australia. We manage Australian and global equity funds across core and sustainable strategies. So for the purpose of the discussion today, I’ll focus on the Australian Share Fund. So that is a concentrated portfolio of about 35 to 55 high quality, large cap Australian listed companies, all of them being in an earnings upgrade cycle. 

What we’re looking for is we look for quality companies in an earnings upgrade cycle, trading at reasonable valuations. It’s a style-agnostic fund, so it’s designed to set as a core exposure in a portfolio and the key focus is to deliver consistent alpha through various market cycles — so either a growth or a value cycle. We’re style agnostic so we can hold any style company as long as it’s got those underlying characteristics I’ve explained.

MF: The world has changed dramatically since we last spoke about a year ago. How do you see the market at the moment and where do you see it going?

EJ: Clearly since we’ve last spoken, the market had a massive rally and then a big pullback again. If you look at the market versus a year ago, the market is certainly much cheaper than what it was, but I think the world is also a bit more of an uncertain space. 

Even post-COVID, we had a fantastic rally even through this period, but I think now we are at the point where it’s a little bit uncertain if the world’s actually going to go into a recession or not. I think if you look at it from an international perspective, it’s probably more uncertain than what we have here in Australia. 

The way we currently see it is that the overall market has derated quite a bit, but if you exclude the cheaper commodities and banking stocks, the rest of the market is actually not as cheap.

So with that, the combination of a lot of uncertainty around the earnings and where earnings growth is going to come from, we think we definitely [are] still in an earnings downgrade cycle. At this point in time for us, we have been transitioning our portfolio to be a bit more defensive over the last number of months. We’re definitely more exposed to the value defensive side of the market currently rather than in very highly valued, high growth companies, which we think is a bit of a difficult environment to be in. 

We have overweight positions in some of the more defensive parts of the market like insurance, for example. But for us it’s very much about bottom-up stock selection and looking for each of those companies in the various sectors that’s high quality, that’s got strong balance sheets and that can still grow earnings in an environment where the overall market might not be able to.

The post The ASX shares we’re targeting in an uncertain world: expert appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Thursday
• Think it’s boring? The IAG share price has totally smashed the ASX 200 so far in 2022
• Medibank share price halted after hackers claim to have taken customer data
• Rio Tinto share price has 20% upside and 7% dividend yield: Goldman Sachs
• Why did the Magellan share price get bashed around today?

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Wednesday, the S&P/ASX 200 Index (ASX: XJO) was on form again and pushed higher. The benchmark index rose 0.3% to 6,800.1 points.

Will the market be able to build on this on Thursday? Here are five things to watch:

ASX 200 expected to fall

The Australian share market looks set to fall on Thursday after a poor night on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 60 points or 0.9% lower this morning. In late trade in the United States, the Dow Jones is down 0.4%, the S&P 500 has fallen 0.7% and the NASDAQ has dropped 1%.

Oil prices rebound

Energy shares including Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a decent day after oil prices rebounded on Wednesday night. According to Bloomberg, the WTI crude oil price is up 2.8% to US$85.10 a barrel and the Brent crude oil price is up 2% to US$91.88 a barrel. Traders appear to believe that oil prices have been oversold.

Annual general meetings

A number of ASX 200 companies are holding their annual general meetings today and could provide trading updates. This includes health supplements company Blackmores Ltd (ASX: BKL), healthcare company Healius Ltd (ASX: HLS), struggling fund manager Magellan Financial Group Ltd (ASX: MFG), fellow fund manager Perpetual Limited (ASX: PPT), and toll road operator Transurban Group (ASX: TCL)

Woodside quarterly update

The Woodside Energy Group Ltd (ASX: WDS) share price will be on watch when it releases its quarterly update this morning. Investors will be keen to see if the energy giant is still on track to achieve its full year production guidance of 145 – 153 Mmboe. Woodside’s costs may also be in focus. During the first half, it reported a 47% increase in unit production costs to US$7.2 per boe due to the impact of maintenance and the Wheatstone shutdown.

Gold price tumbles

Gold miners Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a difficult day after the gold price dropped overnight. According to CNBC, the spot gold price is down 1.3% to US$1,633.8 an ounce. The precious metal hit a three-week low after US treasury yield strengthened.

The post 5 things to watch on the ASX 200 on Thursday appeared first on The Motley Fool Australia.

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More reading

• Why did the Magellan share price get bashed around today?
• Why is the Woodside share price having such a stinker this week?
• Beach Energy share price sinks 6% as production tumbles
• 5 things to watch on the ASX 200 on Wednesday
• It’s a good day on the ASX 200. So why is the Woodside share price getting beaten up?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Blackmores Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It can be a challenge to outperform the S&P/ASX 200 Index (ASX: XJO) at the best of times. Yet, the Insurance Australia Group Ltd (ASX: IAG) share price has been one of the top 20 index constituents to outperform the benchmark the most this year.

Over the last 10 months, shares in the general insurance company have surged 14.8% to the upside. Meanwhile, the broad market index has fallen more than 10% to the wayside.

So, how has a seemingly ‘boring’ business like IAG made such a solid return for investors of late?

Boring can be beautiful

At its core, investing is about owning portions of great companies with the ability to accrue profits over time. Ideally, you want to invest in a company at the right price. Though, what the ‘right price’ is a question only answered in retrospect.

One way a company can be temporarily undervalued — or cheap — is for the broader market to underestimate its earning potential. This opportunity can manifest when most underestimate the duration for which the company can generate profits or the size of those annual earnings.

This situation might be playing out for the IAG share price in 2022, as we look at the company’s earnings and share price fluctuations over the last couple of years.

Between the start of 2020 and 2022, shares in the insurance provider fell 44%. The combination of an increase in natural disaster occurrences and COVID-19 weighed on the company.

Namely, IAG created a $950 million provision in the event it would need to cover claims pertaining to business interruption insurance due to the pandemic. Due to the provision, IAG’s statutory earnings have been reduced.

Meanwhile, the company’s cash from operations between the start of 2020 and now have increased. Specifically, IAG generated $899 million in operational cash flow for the 12 months ending 30 June 2022. This compares with $407 million as at December 2020.

As we recently reported, $350 million of those provisions are now being returned to shareholders in the form of a share buyback. This follows the High Court denying appeals against COVID-19-related claims.

Is the IAG share price a buy still?

At present, IAG shares are trading on a rather rich price-to-earnings (P/E) ratio of 36 times. For reference, the global insurance industry average is 11.4 times earnings.

Despite this, deputy head of equities at Perpetual Limited (ASX: PPT) Vince Pezzullo shared his liking for IAG in a post on Livewire last month. According to the portfolio manager, IAG could be trading at a discount.

In addition to the solid IAG share price growth, the company offers a reasonable dividend yield of 2.3%.

The post Think it’s boring? The IAG share price has totally smashed the ASX 200 so far in 2022 appeared first on The Motley Fool Australia.

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More reading

• Could investors in this ASX 200 share be in for more payment windfalls?
• Here are the top 10 ASX 200 shares today
• IAG share price takes centre stage on $350 million buyback news
• IAG share price halted amid High Court ruling
• Could this be a looming risk for IAG shares?

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Medibank Private Ltd (ASX: MPL) share price will be one to watch carefully in the coming days.

This follows the release of an update on its cybersecurity incident after the market close today.

Why is the Medibank share price on watch?

Last week, Medibank revealed that it detected unusual activity on its network.

After taking immediate steps to contain the incident and engage specialised cyber security firms, the company stated that it didn’t believe any customer data had been removed.

The company then went on to say that as a health company providing health insurance and health services, it holds a range of necessary personal information of customers. In light of this, it stressed that the protection of customers’ data security is its highest priority.

Unfortunately, it may have failed with its highest priority, with the company no longer sure that customer data wasn’t removed from its systems.

What’s happened?

This afternoon, management revealed that it has received messages from a group that wishes to negotiate with the company regarding their alleged removal of customer data.

Medibank is treating the matter seriously and working urgently to establish if the claim is true.

As a result, the company has suspended its shares and they will remain that way until the matter is resolved.

Medibank’s CEO, David Koczkar, commented:

I apologise and understand this latest distressing update will concern our customers. We have always said that we will prioritise responding to this matter as transparently as possible. “Our team has been working around the clock since we first discovered the unusual activity on our systems, and we will not stop doing that now. We will continue to take decisive action to protect Medibank customers, our people and other stakeholders.

The post Medibank share price halted after hackers claim to have taken customer data appeared first on The Motley Fool Australia.

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More reading

• Medibank share price halted ahead of new ‘cyber incident’ update
• Why Adbri, Costa, Hawsons Iron, and Medibank shares are sinking today
• Medibank share price sinks on cyber incident and trading update
• Medibank shares on ice as details of cyberattack emerge
• Experts name 2 ASX dividend shares to buy now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Rio Tinto Limited (ASX: RIO) share price was out of form on Wednesday.

The mining giant’s shares ended the day slightly lower at $94.01.

This appears to have been driven by a mixed reaction from analysts to the company’s third quarter update yesterday.

One broker that is sticking with the company is Goldman Sachs.

What did Goldman say about the Rio Tinto share price?

According to a note, Goldman was relatively pleased with Rio Tinto’s performance during the third quarter.

And while some may now doubt that the company can achieve its iron ore shipments guidance for FY 2022 after that soft quarter, Goldman believes it is possible. It commented:

RIO expects Pilbara shipments to be at the lower end of the 320-335Mt guidance range (GSe already there at 322Mt), implying ~86Mt of shipments in 4Q, which is achievable in our view with the ongoing ramp-up of the ~45Mtpa Gudai-Darri mine.

Goldman also highlights that things are finally progressing for the Rhodes Ridge joint venture. If all goes to plan, the broker feels it could be a significant contributor to its Pilbara operations. It said:

After a decade long wait, RIO (50%) have agreed with Wright Prospecting (50%) to modernise the JV covering the 6.7Bt, ~62% Fe Rhodes Ridge deposit in the East Pilbara […] We think the development of Rhodes Ridge has the potential to be significant for RIO’s Pilbara business as it could lift system capacity, product grades and FCF/t, but will lower RIO’s equity tonnes.

Are its shares a buy?

The note reveals that Goldman has retained its buy rating on the miner’s shares with a trimmed price target of $112.90.

This implies potential upside of 20% for investors over the next 12 months. In addition, the broker is forecasting a fully franked 7.2% dividend yield in FY 2023, bringing the total potential return beyond 27%.

Goldman remains bullish due to its “compelling valuation” at 0.82x NAV and 4.2x FY 2023 EBITDA. The broker also highlights its strong free cash flow generation and big dividend yield as other reasons to buy.

The post Rio Tinto share price has 20% upside and 7% dividend yield: Goldman Sachs appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• Why Adbri, Rio Tinto, St Barbara, and Whitehaven Coal shares are dropping today
• Rio Tinto share price higher despite mixed Q3 update
• 5 things to watch on the ASX 200 on Tuesday
• Own Rio Tinto shares? Here’s what to expect from the mining giant’s Q3 update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Magellan Financial Group Ltd (ASX: MFG) share price floundered today, closing 3.22% down to $10.82.

That’s not far off the wealth manager’s 52-week low of $10 a share reached earlier this month.

Magellan has been struggling all year, with its share price down a depressing 43% in 2022. That’s four times the losses of the S&P/ASX 200 Index (ASX: XJO), which is down 10% in the year to date.

What’s going on with the Magellan share price?

What a dog of a time it’s been for the Magellan share price over the past couple of years. Holy moly.

Before the pandemic hit, this was a stellar stock trading above $65 per share.

But a bunch of things have happened to bring it down to its lows today.

Arguably, the most significant is the ongoing decline in funds under management (FUM).

The worst of it came in December 2021 when the fund manager announced it had lost the St James’s Place mandate. This represented 12% of its annual revenue, so it was a mega-hit to Magellan’s earnings.

As we reported earlier this month, investors withdrew a net $3.6 billion in September. This took total FUM to $50.9 billion. That’s less than half the FUM reported in November 2021 ($116.4 billion).

In addition to the FUM decline, Magellan lost its leader in February.

Magellan announced that co-founder Hamish Douglass was taking medical leave. At the time, he was Magellan’s chair and chief investment officer. Co-founder Chris Mackay took over.

Douglass returned to Magellan this month as a consultant stock picker.

Investment staff changes make ratings companies nervous

According to The Australian, rating company Lonsec has placed four Magellan funds on watch.

This includes the Magellan Global Fund (ASX: MGF). It follows the company announcing this week that Mackay would cease overseeing the global equities strategy.

Mackay took on the role after Douglass took leave.

The company also announced some other changes to its investment teams.

Among them, CEO and managing director David George has now been appointed chief investment officer (CIO) as well. George was installed as CEO in August.

Gerald Stack, previously the portfolio manager of the Magellan Infrastructure Fund, is now deputy CIO.

In addition, 10 staff were made redundant.

According to the article, Lonsec does not recommend new investment into the Magellan High Conviction Trust (ASX: MHHT).

In its latest report, Lonsec said:

Lonsec considers the announcement to represent a material change to the leadership of the investment team and will seek to meet with the go-forward team and have the rating resolved as soon as practicable thereafter.

Another ratings company Zenith has also put about 20 Magellan funds under review for the same reason. All of them were previously rated ‘recommended’ or ‘highly recommended’.

The Australian reports that Zenith explained the move in a recent note to clients:

Zenith believes the executive and investment personnel changes are material, noting that Magellan’s entire product suite is affected by the changes.

As such, Zenith has placed the following products Under Review until we meet with the relevant personnel, following which we will provide an update.

The post Why did the Magellan share price get bashed around today? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Do you want the good news or the bad news on how stock market volatility is impacting your superannuation?
• Medibank share price halted ahead of new ‘cyber incident’ update
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why did the Pointsbet share price surge 12% on Wednesday?

Motley Fool contributor Bronwyn Allen has positions in Magellan Financial Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) crept higher on Wednesday despite energy shares weighing it down. The index lifted 0.31% to close at 6,800.1 points.

Meanwhile, the S&P/ASX 200 Energy Index (ASX: XEJ) dumped 0.5% as oil prices slumped lower again.

The Brent crude oil price slipped 1.7% to US$90.03 a barrel overnight while the US Nymex crude oil price fell 3.1% to US$82.82 a barrel.  

On the greener side of the fence, however, the S&P/ASX 200 Utilities Index (ASX: XIJ) led the way, posting a 1% gain.

Consumer stocks also performed well, with the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) and the S&P/ASX 200 Consumer Staples Index (ASX: XCJ) gaining 0.9% and 0.5% respectively.

Finally, it was a bright day for many of the market’s favourite mining shares, with the S&P/ASX 200 Materials Index (ASX: XMJ) rising 0.3%.

All in all, nine of the ASX 200’s 11 sectors closed higher on Wednesday. But which share outperformed all others? Keep reading to find out.

Top 10 ASX 200 shares countdown

Lithium shares reigned supreme on Wednesday, with the share price of Core Lithium Ltd (ASX: CXO) posting the biggest gain. It lifted 8% despite the company’s silence.

Today’s biggest gains were made by these shares:

ASX-listed company	Share price	Price change
Core Lithium Ltd (ASX: CXO)	$1.38	8.24%
Pilbara Minerals Ltd (ASX: PLS)	$5.08	5.83%
Pendal Group Ltd (ASX: PDL)	$4.95	5.54%
Star Entertainment Group Ltd (ASX: SGR)	$2.87	5.51%
IGO Ltd (ASX: IGO)	$16.16	5.14%
Chalice Mining Ltd (ASX: CHN)	$4.17	5.04%
Allkem Ltd (ASX: AKE)	$15.35	4.99%
Costa Group Holdings Ltd (ASX: CGC)	$2.23	4.21%
Atlas Arteria Group (ASX: ALX)	$6.67	4.21%
Mineral Resources Limited (ASX: MIN)	$72.29	4.03%

Our top 10 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• Do you want the good news or the bad news on how stock market volatility is impacting your superannuation?
• Medibank share price halted ahead of new ‘cyber incident’ update
• Top brokers name 3 ASX shares to buy today
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Why Chalice Mining, Core Lithium, Corporate Travel Management, and NIB are rising

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended COSTA GRP FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It has been a day to forget for the Megaport Ltd (ASX: MP1) share price.

The network-as-a-service provider’s shares ended the day a whopping 22% lower at $6.61.

Why did the Megaport share price crash deep into the red?

Investors have been selling down the Megaport share price today following the release of the company’s first quarter update.

Although Megaport delivered quarter on quarter growth across almost all key metrics, it appears as though investors were expecting stronger numbers.

For the three months ended 30 September, the company reported a 9% (6% constant currency) increase in monthly recurring revenue (MRR) to $11.6 million.

This led to its quarterly revenue increasing 10% quarter on quarter to $33.7 million and its annualised recurring revenue lifting 8.3% to $139 million.

This was driven partly by a modest 2% increase in customer numbers to 2,700 and a 1% increase in total ports to 9,606. Though, the latter reflects non-revenue impacting customer-related port consolidation. This follows an increase to capacity on its cloud connections with 100 Gbps on-ramps.

What else?

One metric that went backwards during the quarter was its installed data centres, which could have investors a little concerned.

Megaport’s services are installed in 422 data centres now, down from 423 data centres three months earlier. And while one less centre may not be something to panic about, investors may fear that this is a sign that its footprint is peaking.

Another metric that may have caught the eye was Megaport’s cash balance. Although it was profitable at an EBITDA level for a second quarter in a row, it is still burning through cash.

The company ended the quarter with a cash position of $69.4 million. This is down $13.1 million from $82.5 million at the end of June. Based on this cash burn rate, the company has 5.3 quarters of cash left.

Short sellers will be happy

One group of investors that will be happy with the Megaport share price weakness is short sellers.

As we covered here at the start of the week, the company is one of the most shorted shares on the Australian share market right now.

The post Why did the Megaport share price crash 22% today? appeared first on The Motley Fool Australia.

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More reading

• Why GQG, Megaport, Melbana Energy, and St Barbara shares are dropping today
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• These are the 10 most shorted ASX shares
• These 3 ASX shares have halved this year. I’d buy 2 of them: advisor

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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As most investors would know, 2022 has been a pretty awful year for ASX shares, the share market, and investors. Unfortunately, that doesn’t bode well for the superannuation balances of most Australians.

Remember, superannuation is just a vehicle for investments. It quarantines our compulsory super payments, which most of us make every time we get paid, into a low-tax retirement fund.

Most super funds invest this money into a variety of assets, including cash, bonds, property and both Australian and international shares.

Thus, the value of a superfund is usually determined by the value of the underlying assets inside it.

A tough year for shares… and super

Most of the time (historically speaking) shares, and other assets, tend to rise in value. That’s why super funds invest in these assets to start with. But this doesn’t happen all the time. And 2022 has been an especially hard year for most assets, including shares.

As it stands today, the flagship Australian share market benchmark – the S&P/ASX 200 Index (ASX: XJO) – is down around 10.4% year to date. The American S&P 500 Index (SP: .INX) has fared even worse with a loss of 22.44% in 2022 so far.

So the bad news is that most Aussie super funds would have taken a hit over the year so far, regardless of the fund’s investment strategy.

According to a report from research provider Chant West, all risk categories of Australian super funds have taken a beating over the 12 months to 31 August 2022.

As expected, growth funds have been the worst hit. On average, an ‘all growth’ super fund has reportedly lost 6.2% of its value over the period.

This falls to losses of 4.5% and 3.7% for ‘high growth’ and ‘growth’ funds respectively.

But even ‘balanced’ funds (the risk orientation most super funds use) haven’t been spared. Nor have ‘conservative’ funds. The average balanced fund has reportedly lost 3% over the 12 months to 31 August. While conservative funds are down 2.4%.

Chant West senior investment research manager, Mano Mohankumar, blamed the current economic environment for these disappointing performances. Energy prices, inflation and rising interest rates have all taken their toll on asset prices over 2022. And these have flowed into the performances of Australian superannuation funds.

So what’s the good news?

So that’s the bad news. Let’s get to the good news.

The good news is that, despite the woes of 2022, Australian super funds have still delivered meaningful returns over a longer timeframe.

Over the last 10 years on average, all categories of super funds have delivered positive returns. Again, as expected, the higher growth funds have performed the best.

An all-growth fund has delivered an average of 10.1% per annum over the 10 years to 31 August. This falls slightly to 9.6% for the average high-growth fund, and to 8% for the average-growth fund.

Balanced funds have delivered 6.5%, while conservative funds came in at 4.9%.

Here’s what Mohankumar had to say on the long-term performance of Aussie super funds:

Despite the challenging backdrop over the past two and a half years, the median growth fund is more than 10% ahead of the pre-COVID high that was reached at the end of January 2020.

This should be comforting for fund members. More importantly, funds are continuing to meet their long-term return and risk objectives.

The post Do you want the good news or the bad news on how stock market volatility is impacting your superannuation? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The BetaShares Nasdaq 100 ETF (ASX: NDQ) has faced a steep uphill battle this year.

As concerns about soaring inflation and rising interest rates spread far and wide, few corners of the market have been spared.

But tech shares, in particular, have borne the brunt of the sell-off.

As interest rates rise, like they have been this year, share prices typically fall. Tech shares are particularly sensitive to changes in interest rates because their valuations are largely based on future growth prospects.

This has spelt trouble for the NASDAQ 100, an index that heavily favours technology.

And given that the NDQ ETF aims to track the performance of this index, it too has been down in the dumps.

According to Google Finance, the NDQ ETF has tumbled 24% in the year to date. In contrast, the S&P/ASX 200 Index (ASX: XJO) has suffered a more muted 10% fall.

The NASDAQ 100 index comprises 100 of the largest non-financial companies listed on the Nasdaq exchange.

As it stands, nearly 50% of the NDQ ETF is weighted toward information technology companies. 

Unsurprisingly, its top holdings are a who’s who of tech giants. This includes the likes of Apple Inc (NASDAQ: AAPL), Microsoft Inc (NASDAQ: MSFT), Alphabet Inc (NASDAQ: GOOGL), and Amazon.com Inc (NASDAQ: AMZN).

But it also includes an array of rising tech stars, such as Tesla Inc (NASDAQ: TSLA), NVIDIA Corporation (NASDAQ: NVDA), PayPal Holdings Inc (NASDAQ: PYPL), and Adobe Inc (NASDAQ: ADBE). 

Why I’m keeping the faith

With an ultra-long-term investment horizon, I believe my units in the NDQ ETF will duly appreciate.

As this year has shown, it won’t always be smooth sailing. 

But knowing I’ll have plenty of time to ride out inevitable volatility and reap the wonderful benefits of compounding helps me to sleep easy at night. 

Investing in ETFs passively with the long term in mind, I don’t have to worry about what the market is doing day to day or even month to month.

For me, this is one of the key benefits of investing in index-tracking ETFs.

In my mind, an investment in the NDQ ETF is an investment in the value creation and innovation of a broad basket of leading businesses.

And history shows that over the long term, the stock market has always gone up.

The NASDAQ 100 index, for example, is printing an average return of 15.9% per annum over the last 10 years. 

As we know, past performance is not a reliable indicator of future performance. And I’m not expecting returns to necessarily be this strong in the years ahead.

But I’m happy to back the success of a wide range of the world’s most innovative companies, confident that at the very least I’ll be generating positive investment returns.

Plus, the good thing about an index is that it’s regularly rebalancing. This favours the strong performers and weeds out the companies failing to deliver.

Perhaps my biggest gripe with the NDQ ETF is the management fees. Coming in at 0.48%, it’s well and truly on the high side for a simple index-tracking ETF. This is something to bear in mind.

The cheapest ETF currently on the ASX is the Vanguard US Total Market Shares Index ETF (ASX: VTS), charging management fees of just 0.03%.

The post Here’s why I’m confident my investment in the BetaShares Nasdaq 100 ETF will eventually pay off appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Cathryn Goh has positions in Adobe Inc., Apple, BETANASDAQ ETF UNITS, and PayPal Holdings. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Adobe Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, BETANASDAQ ETF UNITS, Microsoft, Nvidia, PayPal Holdings, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2024 $420 calls on Adobe Inc., long March 2023 $120 calls on Apple, short January 2024 $430 calls on Adobe Inc., and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Adobe Inc., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Nvidia, and PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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