News
24 January 2008
What is happening in Global investment markets?
Over the last 4 years superannuation fund members have enjoyed strong double digit returns off the back of a strong world economy and stock markets at record levels.
The media is now full of stories about falling sharemarkets and negative superannuation fund returns. Fund members are understandably concerned and want to know what`s going on, what is Vision Super doing and what should members be doing in the current situation?
What`s Going On?
In a nutshell, investors worldwide are losing confidence. This fall in confidence was initially triggered by concerns about the United States sub prime mortgage defaults and consequential losses in a number of the world`s leading finance companies. Investors are now becoming increasingly concerned about the possibility of a recession in the United States and what impact that might have on the rest of the world.
A typical superannuation balanced portfolio would have between 55% and 75% of its assets invested in equities. Vision Super`s Balanced Growth portfolio in which the majority of members are invested has a more conservative 51% allocation to Australian and global equities. Vision Super has no direct exposure to the US sub prime market and unlike many super funds, it does not have a dedicated allocation to listed property trusts which have performed poorly in recent times.
What is Vision Super Doing?
Your superannuation assets are being managed by some of the world`s leading investment management companies. Each of the Trustee`s pre-mixed investment options has different risk/return characteristics. All are managed to a very strong rebalancing discipline in which the proportional strategic allocations to their underlying asset class mixes (i.e. shares, property, fixed interest etc) are maintained at all times. This occurs in both rising and falling markets.
In other words, we are sticking to our strategy, which focuses on long-term outcomes and has served our members well over a very long time. Prudent investment management is as much about risk management as it is about short-term investment returns.
What should members do in times of market volatility?
Sharemarkets move in cycles, and have historically recovered after a correction. Economists cannot predict exactly when the sharemarkets will recover, but past history shows that short-term fluctuations have had little impact on long-term returns. It`s understandable however for members to want to switch their investments or change their strategy in times of adverse market performance. But think before you act. Keep in mind:
- Super is a long-term investment and periods of market volatility should be expected to occur from time to time.
- Markets move in cycles and historically, recovery follows a correction.
- Stay focused on your end goal, super is a long-term investment, even in retirement.
- Don`t throw your investment strategy out of the window every time there is a downward movement in the markets
- Don`t try to guess where the markets are going over shorter time periods. Even the experts can`t get that right.
- The benefits of diversification, which will eliminate some risk, help reduce volatility and smooth investment returns.
We can help
If you have any questions about your super or the Vision investment options contact Member Services on 9911 3222 (regional callers 1300 300 820).
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