Super funds shocked by shaky share market

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More Australian super fund holders are shifting to cash investments in a bid to bypass a shaky share market.

After a year of positive returns in the double digits, super returns have begun the year in the red, prompting many retirees, investors and super fund managers to switch to alternative investments in order to mitigate short-term volatility.

Signs of US inflation and higher global interest rates, as well as a potential trade war between the US and China have spooked markets this year.

As a result, many super balances have taken a hit and, as a result, fund managers are allocating more funds towards bonds and cash.

Some money experts are warning self-managed fund holders to shift their retirement savings from shares, or risk losing a significant amount from super.

The possibility of a trade war between the US and China has created a challenge for fund managers trying to calculate where money should go in order to be safe from market volatility.

And while they aren’t exactly running scared, investment strategists certainly have their hands full.

“There’s no indication suggesting we’re going to have a major bear market or global recession or anything like that, so therefore it’s really a case of fine tuning,” said AMP Chief Economist Shane Oliver.

TD Securities senior strategist Mitul Kotecha can usually anticipate major market moves, but with all that’s going on politically and financially, even he concedes the outlook is ‘foggy’.

“There’s clearly a lot more uncertainty, things aren’t as easy to predict as perhaps they would have been [in the past],” said Mr Kotecha.

“If you look at the way things have moved as well, last year there was an expectation of strong US growth – clearly that didn’t happen.

“The [US] dollar weakened for most of last year.”

While many blame Donald Trump for a shaky market, Mr Kotecha disagrees.

“Equity markets rallied significantly over the last year,” he said.

“What had been expected is not what actually occurred in markets, and I think that’s added to this amount of uncertainty.”

And while first-quarter earnings reporting time is upon us, with potentially positive news for shareholders,Mr Kotecha says there could still be grim times ahead for super funds, especially considering the “significant downward pressure” on the global economy which will dampen earnings and returns.

“That’s something that I think markets will still have not yet at least fully anticipated or priced,” he said.

“That is the wild card.”


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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?



Total Comments: 19
  1. 0

    The share market has always been a volatile area of investment apart from those prepared to pay large amounts for Blue Chip shares. It has always had a boom and bust background with short periods of stability thrown in and is for high risk investors. I use a fund manager as I am not confident in tackling a SMSF with all of the knowledge needde to run it without accidentally breaking the rules. This article suggests that the upcoming period may cause a drop in share values but it may happen just because an article like this is written.

    • 0

      I had similar thoughts on reading this article – firstly, share markets by nature are volatile due to many boofhead speculators with more money than sense, and secondly, such articles tend to create the momentum by spreading panic. Currently, I can’t see much reason for panic at all.

  2. 0

    I actually move quite a bit of money out of the market in January and now have started moving it back in.

    • 0

      What was the decision making behind
      “move quite a bit of money out of the market in January and now have started moving it back in”

    • 0

      I tend to sell when market goes up and buy when market goes down. There was a big rise from about October to January so I sold and took profits on some holdings. I have noticed a bit of movement in lower end of market so have been taking a few small positions.

    • 0

      Yep. Way to go. 🙂

    • 0

      Appears to me there is a fair bit of technical analysis into market behaviour in that and maybe value investing. Do you do that with individual stocks or the market generally ?

    • 0

      I use charts for the market and individual stocks. I also use scanning software to help me look for opportunities.

    • 0

      Wonder your mate OGR hasn’t made a comment here OG, she seems to be into shares.

    • 0

      Another wrong assumption, Misty. My SMSF does own shares, but through professional managers. I really wouldn’t know anything about the markets, though I’ve started studying recently because I’ve noted OG’s comments that by learning to manage his portfolio himself, he’s able to achieve much better returns. His comment above interests me. I’ve been reading Dale Gillam’s strategies, which appear to be roughly aligned with OG’s.

      BTW. I am no mate of OG’s. Just because I agree with him about one policy doesn’t make us friends. I disagree with him a lot of the time, and regular YLC readers know we’ve had some fairly aggressive exchanges – mostly because I stick up for the disadvantaged, though lately I’m wondering why give the selfishness and lack of respect I’m seeing from some. OG and I have very different life experiences. We come from entirely different worlds and our views have accordingly been shaped in very different ways.

    • 0

      I agree with everything except the leave it alone. If something rises say 50% to 100% in day I’m out of there.

  3. 0

    Cash investments are the worst since I don’t know when. Why in the world would you pull out of a fluctuating market.
    But if the shares fall – buy buy buy. Sale time. 🙂

    • 0

      Not always bad investments, having a few investments in other currencies might help when our currency goes down again. Remember a time when one Australian dollar was worth $US 1.40, late 60s.

  4. 0

    anyome making investment decisions based on this article must have rocks in their head

  5. 0

    I have money in industry super. I check the balance regularly. Not even twitching slightly

  6. 0

    I wouldn’t buy shares without getting some expert advice, maybe that could be a job for you OG.



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