Understanding market volatility and super performance

Financial markets have been up and down recently. But what does this mean for your future retirement security?  
Most investments will rise and fall over time, so it’s important to understand how – swings in performance – known as market volatility – can affect your super.  
The size and frequency of changes in investment values, both up and down, are more noticeable in the short term. And it’s not unusual to expect periods of short-term volatility sometimes. 

What causes market volatility?

In general, financial markets don’t like uncertainty, disruption or instability.  
Several events have affected investment performance recently. Moving out of the COVID-19 pandemic has led to labor shortages, an increase in consumer spending and supply chain disruptions. The Russian invasion of Ukraine has also impacted global supply chain issues.  

These events have also contributed to the highest inflation in decades. Rising inflation is often connected to an increase in market volatility, lower fixed interest and equity (share market) returns. As inflation reduces future purchasing power, it can also decrease the real value of an investment. 

To fight inflation, central banks have been rapidly raising interest rates. Increases in the cost of borrowing have impacted investment markets, resulting in underperformance across the globe. 

What does this mean for super?

It’s important to remember that ups and downs are a normal part of investing. AustralianSuper’s investment team believes in active management to enhance member returns1. 

Over the last 20 years, significant market events like the Global Financial Crisis, the Brexit vote and COVID-19, appear relatively smooth when looking at overall long-term growth. 

Having diversity in your super investment can be key to cushioning market downturns. Assets such as infrastructure, private equity and cash can act defensively in a market dip while positioning the fund to enjoy future benefits when the market recovers.  

How to protect your super

When going through swings in investment performance, it can be helpful to remember super is a long-term investment.  

If you’re concerned about changes to your super balance, or the effect on your retirement plan, consider speaking to an accredited financial adviser. They can help you review your retirement goals and consider your investment options[2]. 

  1. Personal financial product advice is provided under the Australian Financial Services Licence held by a third party and not by AustralianSuper Pty Ltd. Fees may apply.
  2. Investment returns aren’t guaranteed. Past performance isn’t a reliable indicator of future returns.  

This information may be general financial advice which doesn’t consider 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 available at australiansuper.com/pds or by calling 1300 300 273. 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. 

Sponsored by AustralianSuper Pty Ltd, ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.