Market Volatility August 2024
August 7, 2024
Super is a long-term investment. It’s normal to see cycles of strong returns followed by periods of weaker returns and - sometimes even negative - returns. This is known as market volatility.
After delivering strong returns in the 2023/24 financial year, share markets have recently experienced volatility amid concerns the US economy may be slowing faster than expected. It’s not unusual for investment markets to experience periods of volatility. In other words, after periods of strong investment performance, such as what we’ve seen over most of the last financial year, we often see periods of weaker performance.
The recent market volatility in early August 2024 comes after many share markets around the world had reached record highs, helping deliver solid gains to TelstraSuper members in the 23/24 financial year.
Our MySuper Growth Investment Option earned 9.6% for the financial year to 30 June 2024, while our MySuper Balanced investment option earned 8.0%.
Our retired members also enjoyed positive returns. In the year to 30 June 2024, our Lifestyle Growth investment option returned 9.66%, while our Lifestyle Balanced investment option returned 8.62%, over the same period+.
Super is a long term investment
Our investment team prepare for market volatility and carefully monitor market movements, remaining alert to be both risks and opportunities.
While your super may be affected by investment volatility in the short-term, it is important to keep in mind that the diversified nature of TelstraSuper’s investment portfolios helps us to ride out bumpy market conditions.
With the exception of our single sector investment options, our investment options are diversified across many asset classes, which spreads the impact that a negatively performing asset class may have on the return of our investment options in the short term.
All of TelstraSuper’s diversified investment options have outperformed their long term investment objectives for the period ending 30 June 2024. In accordance with our investment policy, we measure long term investment objectives over 10 years for our accumulation investment options and 8 years for our Lifestyle (retirement) investment options.
Avoid making knee-jerk decisions
You may – understandably – be tempted to switch investment options when you see the market drop, however you should consider your long-term investment objectives and avoid making panicked decisions. Switching at the wrong time could mean you miss out on gains if the market bounces back, and lock in your losses.
History has generally shown that when markets experience sharp downturns, they also recover over time. For example, although we saw large market falls during the height of the Covid19 pandemic, markets rapidly recovered thereafter and then went on to perform strongly in the following years.
Members who panicked and switched to cash during the Covid-led drop were generally worse off than those who stood firm on their long-term strategy. Members who didn’t make changes saw their accounts recover after the falls because they left their investments to recover, rather than crystallised capital losses.
It's normal for markets to have cycles of ups and downs so consider if you have time to ride out short term bumps and make the most of gains when the market bounces back.
Are you in the right investment option?
Market volatility is a reminder of the importance of being in the most appropriate investment option(s) for your needs. So consider trying the Investment Choice selector, provided by TelstraSuper Financial Planning.
This intuitive tool is designed to make investment recommendations based on your needs. In just a few minutes you can find out your investment style, your appetite for investment risk, and which TelstraSuper diversified investment option best suits you.
From there, you can choose to switch options or get phone or face-to-face advice to support any outputs generated by the tool.
SEE WHAT TYPE OF INVESTOR YOU ARE
Help is here if you need it
If you are considering making a change to your TelstraSuper investment options or have any concerns about how the recent share market volatility may impact your super, consider speaking with an Adviser from TelstraSuper Financial Planning. To speak to an Adviser, call 1300 033 166 or connect with us on live chat.
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