Investment markets and your super

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.

After delivering strong returns in the first half of the 2023 calendar year, investment markets have experienced volatility. 

It’s not unusual to see some cyclicality in investment returns.  In other words, after periods of strong investment performance, such as the first 6 months of the calendar year, we often see periods of weaker performance, as markets take a bit of a breather from the previous highs.

Our portfolios are currently somewhat cautiously positioned because we’ve been concerned about the potential for inflation and geopolitical risk.  Our target allocations to Australian equities are slightly lower than our long term targets while our target exposure to Government Bonds and Foreign Currency is slightly higher than usual.   

In the early part of October, we've seen a tragic escalation of geopolitical risks in the Middle East.  While the initial investment market reaction to these events has generally been muted, we are closely monitoring developments, and believe this is another reason to maintain a level of caution in our portfolios.

It’s important to note that returns over a twelve month period (to September 30) are strong – including almost 11% for the MySuper Growth option and almost 19% for the MySuper International Share option, with the Property option being the one exception, with a small negative performance.

See our latest market update below for more information on investment markets and returns. 

Investment market update September 2023

Investment market update September 2023
Investment market update August 2023
Investment market update July 2023
Investment market update June 2023
Investment market update May 2023
Investment market update April 2023

Super is a long term investment

While your super may be affected by investment volatility 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 is 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 see in this chart below for TelstraSuper's Balanced option:

Graph: Balanced option annual returns since 1992

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 and avoid making panicked decisions. Switching at the wrong time could mean you miss out on gains when the market bounces back. 

For example, investment markets surged after the drops at the start of the COVID-19 pandemic. People who panicked and switched to cash following the initial market falls may have missed out on the recovery that came after.

Read more about lessons from COVID-19 market volatility

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.
  • Progressively over 2021, we started to adjust our portfolios towards a more conservative asset allocation stance, as equity markets rose and we became aware of rising potential risks. We did this by selling part of our share portfolios and holding more cash. This action has thus far 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.

This period of volatility is coming after a period of strong returns, which saw TelstraSuper deliver some of the strongest returns to 30 June 2021 in our 31 year history. The year to 30 June 2022 was a moderately negative year for our diversified investment options, but so far (to mid March) the 2023 financial year has been positive for our diversified options, despite the recent falls in markets.

View recent returns

Things to consider if you are thinking about switching

red clock

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.

red arrow pointing up

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.

red graph

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

  • Why is there volatility?

    A combination of factors led to the recent highly volatile equity markets in the first half of 2022.  Russia’s invasion of Ukraine has sparked fears that the conflict will spill over in to other parts of the world and will put pressure on inflation, energy prices and global trade.

    Share prices react to various things such as political developments, economic indicators such as inflation and consumer spending, and corporate activity. Share markets fluctuate in their value as new information is received and investor sentiment changes.

    Depending on developments and economic announcements, shares in different sectors and industries can move up sharply one day, and then drop again the next. It all depends on how many people are trying to buy or sell the shares at any point in time.

    It’s important to keep in mind that while periodic negative returns in share markets are not welcome they are normal and super funds factor them in when developing their long-term investment strategies.

    The graph below shows total cumulative returns for the Australian Share Market since 1992.

  • Will my super be affected by the recent volatility?
    It may be affected, especially in the short-term. Generally those options with higher allocations to shares will be more volatile than those with lower allocations. It is important to keep in mind that superannuation is a long-term investment and over the long-term, there tend to be many more market ups than downs.
  • Should I switch investment options?
    We can’t answer that as it’s an individual decision.  However, we would caution against having a knee-jerk reaction to short-term movements. TelstraSuper has a suite of investment options to cover a wide range of different investment needs and preferences. If you’re considering making a change to you current option, you should speak to a financial adviser.
  • Would it be easier for me to move my money to cash or a term deposit?

    Cash and term deposits provide a high degree of stability and security. It is unusual to lose money in these options. However, the expected long term returns from cash and term deposits are significantly lower than the returns expected from assets such as shares and property, so cash and term deposits are usually not suitable for long term investors.

    You can speak with a TelstraSuper Financial Planning Adviser to discuss your investment strategy in more detail and to work out what’s right for you.

  • I am nearing retirement or currently in retirement should I be making any changes?

    It’s important to remember that although markets are volatile, super is a long-term investment. Even in retirement your money may be invested for over 20 years which means it can still recover from the short-term bumps.

    TelstraSuper has a suite of investment options, some of which have been designed specifically to address the needs and risk preferences of retirees. You should speak to a financial adviser to help you decide what’s right for you. TelstraSuper Financial Planning Adviser can work through your investment profile and provide you with advice around your investment strategy.

  • My balance has dropped? Why?

    Markets can be volatile in the short-term, and as some of your super may be invested in Australian and International Shares which are affected by volatility this can cause your super to drop in value. But super should be treated as a long-term investment, and when the markets recover so will your super balance. You should also remember that your super balance has most likely benefited from strong investment markets for several years now, and despite recent market falls, your balance is likely to be much higher than it was a few years’ ago.

    You should speak to a financial adviser before making any decisions. TelstraSuper Financial Planning Adviser can work through your investment profile and provide you with advice around your investment strategy.

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.

Past performance is not an indication of future performance.