Aussie super funds falling victim in a volatile market. Is yours one?

Australia’s largest super funds not immune to effects of global pandemic.

wilted seedling

The volatility of global financial markets caused by coronavirus is taking its toll on some of Australia’s largest superannuation funds, according to the latest Rainmaker analysis.

Even Australia’s largest superannuation fund, AustralianSuper, is not immune to the effect of coronavirus, superannuation returns and unit pricing analysis shows.

According to the $176 billion industry fund’s cumulative return data, its balanced option fund had -13.3 per cent returns over the period between 20 February and 12 March, reports Financial Standard.

Over the same period that the Australian share ASX 200 index dropped by 25.9 per cent, AustralianSuper’s Australian Share option returned -22.8 per cent.

First State Super’s balanced growth option fared much better but still lost around 8.7 per cent. QSuper’s balanced option lost about 7.2 per cent, Colonial First State’s FirstChoice Wholesale Balanced option lost 16.7 per cent, while its FirstChoice Wholesale Australian Shares fund lost a whopping -25.5 per cent over the period.

“The latest results show that from the top of the market on 20 February, balanced funds have fallen between 7 per cent and 23 per cent,” said Rainmaker head of superannuation research Jason Ross.

“Some Australian equities funds have fared better than others. Funds that have performed worse than the market index indicate active investment styles that may have included a higher allocation to banks and mining stocks.”

AustralianSuper chief investment officer Mark Delaney told Financial Standard fund members should keep in mind that superannuation is long-term investment.

“When people see their super balance fluctuate, it can tempt them to change investment options,” said Mr Delaney.

“What is important is to stay focused on the long term. If you’re investing for the long term, you’re going to have events like the one we are experiencing now, but the long term smooths things out, and that enables you to build long-term savings.”

Even members who are close to retirement should consider a longer “investment horizon”, says Mr Delaney, who suggests this could stretch from anywhere between 20 to 30 years.

Investors, then, should remember that a diversified superannuation investment could still protect them from market shocks.

“Diversification in super also matters,” he said. “The purpose of diversification is really to smooth out the volatility, the ups and downs of the markets. The idea being that, when something goes up, another thing may go down, and offset each other partially.

“That idea of having a superannuation option where you’ve got property, and infrastructure, and bonds, and corporate debt, and shares, and overseas shares, and technology stocks for example, gives members a fairly wide exposure, without betting everything on the one asset class.”

Have you been afraid to look at your super? What are you doing to protect your retirement savings?

If you suspect you or a family member has coronavirus you should call (not visit) your GP or ring the national Coronavirus Health Information Hotline on 1800 020 080.

Amendment: Financial Standard initially reported that AustralianSuper's balanced option fund returned 22.7 per cent, not 13.3 per cent, and that its share option returned -38.1 per cent, not -22.8 per cent. The corrections have been applied to this article. Apologies to our members and to AustralianSuper.

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    18th Mar 2020
    Just recently come off a lengthy and frustrating engagement with CL. over Asset Update for our Super Fund.
    Now due to receive our funds updated balance as at end March..... It will be a shocker.
    Then intend to go back to CL and present the latest asset figures for review and adjustment.
    Not the way I want to play the game but they and only they set the rules .. so now going to play by their rules.
    18th Mar 2020
    One reason I got out of the super fund I was in when I retired after the GFC. You are a swimming in champagne one day and then in piss the other. Got everything in cash, lost on paper and now gaining in paper but do not have to report to C/Link all the time any more. I let other people have sleepless nights as I do not need them again. All you need is enough!

    18th Mar 2020
    I would not like to be owning property at present as the downturn in the share market is going to be mild to what the downturn in the property market will be.
    18th Mar 2020
    Hard to say, Retiring Well. The median price for a detached house in Sydney is as follows. 2008, $517K; 2009, 490K; 2010, 612K; 2011, 595K. As you can see the prices were erratic. Back then, Chinese buyers took an interest in Sydney property. Now the communist government has blocked foreign investment. As a rule of thumb, when unemployment rises, property prices fall. It is hard to believe a fall greater than 10% would happen in the Holy Grail of Australian real estate, Sydney. But you never know.
    18th Mar 2020
    If you have a self managed super fund and all your money is in Australian Shares purely for the Franking Credits, then you will have a lot to worry about as the economy spirals
    18th Mar 2020
    I moved to cash six months ago. When do I get back into equities? I dont think I have to rush.
    18th Mar 2020
    AGREE with MARINER!Had the same after the GFC.ALL YOU NEED IS ENOUGH!!
    18th Mar 2020
    I was forced to retire 2 years ago, 11 months before going onto the Aged Pension. Could not find another job. What small amount of super I did have - most went to pay off my mortgage. Still have a small balance in super - but that has been decimated. Being solo, it is bloody hard. I relied on the small amount of super that I did get to pay my annual rates (a killer!)
    Although I must admit - I'm glad I'm on the pension NOW rather than being unemployed, as will many people face.

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