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Market update

As we move into 2024, it’s a good time to look back at 2023 and the major themes which influenced markets and affected investment returns for super.

There were three major themes which dominated markets in 2023.

1. Inflation

Inflation is an increase in the price of goods and services. When inflation is high, prices are accelerating and you pay more for many of the things you buy. A little bit of inflation is good for an economy, because it shows it’s growing, but when it’s too high it becomes a problem. It means you may no longer be able to afford the things you need, like medicine and electricity.

Starting in 2022 and continuing in 2023, rising inflation is exactly what we saw in most countries around the world. It rose quickly as Covid lockdowns ended, and has been much higher than central banks, including the Reserve Bank of Australia (RBA) want it to be.

Central banks have therefore been increasing interest rates to try to bring it down.

2. Rising interest rates

Interest rates are central banks’ main tool to control inflation. When they raise rates, they hope to slow the economy down, which brings inflation down as well. Since May 2022, the RBA has raised rates 13 times, from 0.1% to 4.35% at the end of December 2023.

There’s always a lag between rates going up and the economy slowing down, so it’s difficult for central banks or markets to predict with certainty how quickly, or by how much inflation will fall when rates rise.

This is an important point to understand because during 2023, it was investor uncertainty about how high rates would go, and how quickly central banks would raise them, which caused periods of market volatility, or ups and downs.

3. Geopolitical tensions

Geopolitical tensions and conflicts cause volatility in markets because they create investor uncertainty. This year we saw on-going global conflicts around the world, and these made markets volatile at times.

Looking ahead to 2024

Looking forward to 2024, inflation and central banks’ likely response to inflation is still uppermost in investors’ minds.

As we ended 2023, global growth outside of the US had slowed, and inflation had been falling. This is exactly what central banks were hoping to achieve, and that’s good news.

On the other hand, the key question remains: Have central banks done enough to push inflation down to acceptable levels? Or have they slowed economic growth too much which could induce a recession?

No one knows for certain, and this means they don’t know what central banks will do next when it comes to interest rates. Will they raise rates again, will they keep them at current levels, or will they finally cut interest rates?

In Australia, the monthly inflation measure has fallen from a high of 8.4% at the end of 2022 to 4.3% at the end of November, which is a significant drop, but inflation is still a long way outside the RBA’s target range of 2-3%.

Only time will tell whether inflation will continue to fall, what the full effect on the economy of previous rate hikes will be, and what the RBA will do in response.


When we talk about markets, we’re typically talking about the share market, and other investment markets, like the bond market. That’s because it’s what happens in these markets that drives returns for your super, and creates movement with your balance.

In the December quarter, sentiment began to improve as inflation continued to fall, and economic growth slowed, which led investors to believe that not only are interest rate rises at an end, but that we might even see US cut rates in the first half of 2024. This more positive sentiment saw share markets perform particularly well over the quarter, and they ended the year in strong, positive territory. This helped most of our diversified investment options deliver strong results as well.

If you’re a retiree, falling inflation is positive, as well as interest rates being higher than they have been in recent years. Most retirees are typically invested in portfolios with higher allocations to more defensive asset classes, like bonds and cash. Returns from bonds and cash are higher when interest rates are higher.

You can see below the performance of our core diversified super options and the pension option where most of our retired members are invested.

Scroll table horizontally on mobile

Aware Super Performance to 31 December 2023
  10 years p.a. 5 years p.a. 1 year
Future saver (super) options      
High Growth* 8.4% 9.3% 12.3%
Balanced 7.2% 7.7% 11.0%
Conservative Balanced 5.8% 5.7% 8.8%
Retirement Income (pension) option      
Conservative Balanced** 6.6% 6.5% 8.7%

*Default option for members aged 55 and under, where most of Aware Super’s accumulation (super) members are invested

** Default option for retired (pension) option, where most of Aware Super’s retired members are invested

We will be sticking to our long-term strategy and focusing on investing in quality assets which we believe will deliver strong long-term returns to our members.

Get expert advice and guidance

If you have any questions regarding your investment strategy, speak to one of our financial planners. Call us on 1300 192 602 to book today.


This is general information only and does not take into account your specific objectives, financial situation or needs. Seek professional financial advice, consider your own circumstances and read our Financial Services Guide, any relevant product disclosure statement & Target Market Determination, before making a decision. Call us or visit our website for a copy. 

Past performance is not indicative of future performance.

Issued by Aware Financial Services Australia Limited (ABN 86 003 742 756, AFSL No. 238430), wholly owned by Aware Super (ABN 53 226 460 365) whose trustee is Aware Super Pty Ltd (ABN 11 118 202 672, AFSL 293340). For customer service please call 1800 620 305. Financial planning services are provided by Aware Financial Services Australia Limited, ABN 86 003 742 756, AFSL No. 238430. Estate planning services are provided by Aware Super Legal Pty Ltd (ACN 606 835 170), an Incorporated Legal Practice.