Understanding the potential risks of the investment option you choose is a key element of managing your super.
Periods of market volatility have occurred through time and dramatic news headlines can be unnerving.
They make it tempting to switch in and out of more conservative investment options - in an effort to protect your savings.
Unfortunately, investment markets don’t provide a signal of how long a downturn may last, or how quickly the markets will recover.
This makes it extremely challenging to improve your returns by switching options, as you need to get the timing of the both switch into and our investment options right.
We have undertaken substantial research on switching patterns of the Funds’ members, (Member switches July 2009 - June20142),and found that, on average, these decisions left members worse off than had they done nothing.
For example, during the Global Financial Crisis, some members switched to more conservative investment options to try and avoid losses.
Please refer to graph in
video at 1.12 minutes.
Share markets eventually recovered to their pre-GFC levels.
Unfortunately, many people who had switched investment options didn’t switch back to their original strategy.
This had the double negative impact on their savings as they sold when the markets were down and didn’t get back into the market to benefit from the recovery.
This is why AustralianSuper has built a team of over 150
investment experts who are trained to manage portfolios. Specifically, we do 2
things on members behalf
1. We build diversified investment option portfolios,
called our PreMixed options. This approach reduces the
volatility that our members experience, so that you can remain invested through
market cycles. We do this by combining a range of asset classes including
shares, fixed income, cash, property, infrastructure and foreign currency.
2. We monitor markets, economies and indicators and adjust
the Fund’s investments and the strategy of each investment option to help
maximise your retirement savings and manage risk.
The question you need to ask – is it work taking unnecessary
risks by trading your super assets?
Remember – super is about the long-term and we aim to build
investment options that deliver to their return objectives through market
If you have questions about your investment strategy, or
what to do during periods of volatility – visit our website for information on
the investment options available to you as well as details on your financial