Market cycles and super - it’s all about the long term

14 August 2024

Investing successfully for retirement relies on a steady focus and not being distracted by the twists and turns inevitable on any long journey.

For AustralianSuper’s Head of Macro Research & Strategy, Amber Rabinov, the key to success is to remain focussed on your retirement goals. For most members with long-term investment horizons that can often mean staying the course when markets fluctuate.

As Amber explains: ‘Market downturns can be unsettling, but members can take comfort knowing that we invest for the long term and look for opportunities that market downturns can provide. This means we are actively investing in assets that we believe are mispriced relative to our cyclical and longer-term views, as well as in a mix of quality assets globally. This can help deliver strong long-term performance.’

Markets move in complex cycles and can be challenging to predict, especially if you’re not an investment expert. AustralianSuper’s deep team of experts rely on decades of experience and extensive research to help add value over the long-term.

Read more: THE BENEFITS OF ACTIVE MANAGEMENT

Changing markets can cause unease

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. It can be hard to see at the time, but when markets fall it’s often a time of 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.’

AustralianSuper navigates market cycles for members

The chart below shows that over a period of 20 years, despite ups and downs in the market, members’ super invested in the Balanced option has grown. It can be tempting to sell out of the market and wait on the sidelines until it seems safe to dive back in, but many studies show that this strategy can deliver lower returns over the long run.

Growth of $100,000 from June 2004 to June 2024 in the Balanced option - Super

Long term performance of the Balanced option, starting with a $100,000 balance on 30 June 2004.

Understanding AustralianSuper’s investment strategy

AustralianSuper has built a long-term track record of managing members’ retirement savings through market cycles. The Balanced option, where most members are invested, has generated an average return of 8.07% each year over the last 10 years and 7.85% over the last 20 years to 30 June 2024¹.

The Fund’s Balanced option has outperformed the median fund over the last 20 years with a return of 7.85% compared to the median fund return of 7.38%².

For further information on performance click here.

AustralianSuper has an in-house team of over 350³ investment professionals, who help deliver this performance.

Read more: AustralianSuper’s investment strategy

The benefits of patience in times of uncertainty

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 a future upturn when markets rebound. This means members who stay invested in a diversified portfolio often end up in a better position than those who keep changing investment options.

It’s important to consider your risk tolerance and your risk capacity. Risk tolerance is about how much you are comfortable losing over the short term. Risk capacity is how much risk and return you need over the long term to achieve your retirement goals.

Seeking financial advice 

Balancing your risk appetite and personal financial goals is something which may change over the course of your working life and retirement. Consider speaking to a financial adviser⁴ to help you work through any questions and goals. An accredited financial adviser can help guide you when investment markets are bumpy so you can stay calm, focus on your retirement goals and make the right investment choices for you.