Market cycles and super – looking at the long term

In 2021, investment markets rose substantially – but with lingering global supply chain problems, the Ukraine crisis and ongoing Covid concerns, the start of 2022 was a reminder that markets can change quickly.

As AustralianSuper’s Global Economist, Mark Tierney explains:

‘Market downturns can be unsettling. Members can take comfort knowing that we adopt active investment strategies. This means we’re actively looking for opportunities to invest in companies and assets that have been mispriced and investing in a mix of quality assets globally. This can help deliver strong long-term performance.’

Reactions to changing markets

When markets fall, it’s natural to feel uneasy. Many people feel the pain of an investment loss more than they enjoy the success of a gain, but when markets fall it can be an opportunity.

As well-known investor Warren Buffet says, ‘Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.’

The risks of changing course

During downturns, it can be tempting to sell out of the market and wait on the sidelines until it seems safe to dive back in, but history shows that this strategy can miss out on higher returns over the long term.

20 year returns on $100,000 in the Balanced option:

^{AustralianSuper investment returns are based on crediting rates, which are returns less investment fees, the percentage-based administration fee deducted from returns and taxes. Returns don’t include all administration, insurance and other fees and costs that are deducted from account balances. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns.}

The benefits of patience in uncertain times

History shows that the markets increase in value over the long term. By staying invested in a diversified portfolio, your super has more opportunity to benefit from long-term trends. So, for members who stay invested in a diversified portfolio, they may end up in a better position than those who keep changing investment options.

For the full article, read: Market cycles and super

Seeking financial advice?

If you’re looking for financial advice, consider speaking to a financial adviser to work through your long-term goals, find a financial adviser today.

^{This information may be general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/tmd. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.}

^{Sponsored by AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.  Read the PDS and TMD at australiansuper.com}