Super’s first victims of volatility

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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Written by Leon Della Bosca

Leon Della Bosca has worked in publishing and media in one form or another for around 25 years. He's a voracious reader, word spinner and art, writing, design, painting, drawing, travel and photography enthusiast. You'll often find him roaming through galleries or exploring the streets of his beloved Melbourne and surrounding suburbs, sketchpad or notebook in hand, smiling.
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