Chant West Blog

8/2/2018

This week's market volatility reinforces super as a long-term investment and the importance of diversification.

 By MANO MOHANKUMAR

Earlier this week we saw a lot in the media about falls in share markets around the world, and at Chant West we were asked by several journalists about the impact of this on superannuation.

While share markets are the main driver of the performance of 'growth' funds (61 to 80% growth assets and where most Australians have their super), they only have on average about 55% invested in listed shares and REITs. Members can take great comfort from the fact that they're invested in portfolios that are well-diversified across a wide range of growth and defensive asset classes, including unlisted assets such as unlisted infrastructure and property. This helps cushion the blow when there are sharp market falls like we saw this week.

Since Tuesday, markets have recouped some of the losses and we estimate that the median growth fund is only down about 0.6% this calendar year.

Those approaching retirement are naturally more likely to be concerned about such volatility. However, they're typically more conservatively invested. We estimate that conservative funds (21 to 40% growth assets) are only down 0.1% in 2018.

Additionally, members need to remember that super funds have had a great run in recent years. Growth funds have just come off a particularly strong year when they returned 10.8% on average and six straight positive years averaging over 10% a year.  

We encourage members to think long-term and not get distracted by short-term volatility. Timing the market and moving into more conservative options after share market falls can be dangerous as in addition to crystallising your losses, you miss out on any subsequent rebound.

Mano Mohankumar is Chant West's Senior Investment Research Manager with 20 years' experience. Mano regularly provides media comment on superannuation and investment matters.

Resources

Remarkable: a 10th consecutive positive year is in sight

17/Dec/2021

Super funds are closing in on a double-digit result for the 2021 calendar year. The median growth fund (61 to 80% in growth assets) was up 0.3% in November which drove the return for the first 11...

View more

FE fundinfo purchase of Zenith Group completes with FIRB approval

03/Dec/2021

FE fundinfo’s acquisition of the Zenith Group will be completed on 9 December 2021 following the recent approval by the Foreign Investment Review Board (FIRB).

View more

YFYS performance test: good intentions marred by collateral damage

30/Nov/2021

The publication of APRA’s inaugural performance test results has proved confronting, not only for funds that failed the test but also for their members. Anomalies and mixed messages abound...

View more
View More News & Blog

Disclaimer: ©Zenith CW Pty Ltd ABN 20 639 121 403 (Chant West), Authorised Representative of Zenith Investment Partners Pty Ltd ABN 27 103 132 672, AFSL 226872 under AFS Representative Number 1280401, 2022. This website is only intended for use by Australian residents and is subject to use in accordance with Chant West’s Terms of Use and should be read with Chant West’s Financial Services Guide. Products, reports, ratings (Information) are based on data which may be sourced from a third party and may not contain all the information required to evaluate the nominated product providers, you are responsible for obtaining further information as required. To the extent that any Information provided is advice, it is General Advice (s766B Corporations Act). Individuals should seek their own independent financial advice and consider the appropriateness of any financial product in light of their own circumstances and needs before making any investment decision. Chant West has not taken into account the objectives, financial situation or needs of any specific person who may access or use the Information provided including target markets of financial products, where applicable. It is not a specific recommendation to purchase, sell or hold any product(s) and is subject to change at any time without prior notice. Individuals should consider the appropriateness of any advice in light of their own objectives, financial situations or needs and should obtain a copy of and consider any relevant PDS or offer document before making any decision. Information is provided in good faith and is believed to be accurate, however, no representation, warranty or undertaking is provided in relation to the accuracy or completeness of the Information. Information provided is subject to copyright and may not be reproduced, modified or distributed without the consent of the copyright owner. Except for any liability which cannot be excluded, Chant West does not accept any liability whether direct or indirect, arising from use of the Information. Past performance is not an indication of future performance. Chant West ratings and research are prepared by Chant West and are not connected in any way to research and ratings prepared by any of our related entities.

Top