Market Volatility
Super is a long-term investment. It's normal to see cycles of exceptional highs followed by periods of lows and sometimes even negative returns. This is known as market volatility.
With investment analysts predicting further market volatility in 2019, here’s why it happens and what you should consider as a member of TelstraSuper.
Super is a long term investment
While your super may be affected in the short-term, it is important to keep in mind that super is a long-term investment and over the long-term, there tend to be many more market ups than downs. This means that although you may see some negative returns over the years your money in invested; your super balance is likely to be much higher than it was a few years’ ago depending on the option you are invested in.
As an example, you can this see in the chart below for TelstraSuper’s Balanced option:
Our investment teams prepare for volatility
The diversified nature of our investments mean that we’ve been able to ride out bumpy markets and still secure strong investment returns for our members in the long run. While your balance may decrease in the short term, we are still well on track to meeting our long term investment objectives.
Avoid making knee jerk reactions
You may – understandably – be tempted to switch investment options when you see the market drop, however you should consider your long-term investment objectives. Switching at the wrong time could mean you miss out on gains when the market bounces back.
Help is here if you need it
If you’re considering making a change to your super investments, you should speak to a financial adviser. TelstraSuper Financial Planning can discuss your investment objectives and give you advice about your TelstraSuper account over the phone at no additional cost – it’s part of your membership.
What is TelstraSuper doing with their investments to minimise the impact?
We build our portfolios to generate long-term returns in line with the investment objectives for each Option. We try not to over-react to short-term events. We expect heightened volatility to occur from time to time, and have taken the following measures:
- We don’t put all our eggs in one basket. Our options are diversified across many asset classes in many locations. Different markets and assets react in different ways so the risk is spread.
- Towards the end of 2017 we started to make our portfolios somewhat more conservative as a result of assets becoming more expensive. We did this by selling part of our share and property portfolios and holding the proceeds in cash. This action has delivered a measure of protection against the recent market volatility.
- All of our share portfolios are actively managed. Our professional fund managers build our portfolios by identifying those shares that are expected to deliver the best outcomes given the current and expected future economic environment. Although our portfolios haven’t escaped negative returns, many of our fund managers have done better than the market during periods of volatility.
Things to consider if you are thinking about switching
Do you have time to ride out short term bumps?
If you won’t be accessing your super for years to come, there’s still time to ride out any short term bumps and then potentially benefit when markets recover. Even if you’re nearing retirement your savings could still be invested for another 20+ years.
Will you miss out when the market bounces back?
Investment markets can recover just as quickly as they drop. Members who switch investment options after a fall and don’t switch back until after markets rebound can miss out on strong gains.
Is this the right move for you?
Whether you choose a low risk/return or high risk/return investment option can have a big impact on your final super balance at retirement. Rather than reacting to market volatility, you should look at the objectives of the investment options and select one that suits your long term needs.
Speak to TelstraSuper Financial Planning before you switch. There’s no extra cost as it’s included as part of your TelstraSuper membership. Contact us on 1300 033 166 Monday – Friday.
Market Volatility FAQs
Want More?
If you have any concerns about how this may impact your super, consider speaking with an Adviser from TelstraSuper Financial Planning. To speak to an Adviser, call 1300 033 166 between 8.30am and 5.30pm (AEST/AEDT) Monday to Friday or request a call.
- see our latest unit prices
- learn more about investment risk
- log into SuperOnline