Share market volatility
The coronavirus, and more recently the steep fall in the oil price has triggered a global market correction. When panic drives markets, it is wise to take a step back and consider events and information in context and with calm.
While the duration of the current situation cannot be predicted with certainty, many commentators are forecasting that a protracted slow-down due to the coronavirus is likely to be short-lived. Potentially, as short as a couple of months.
Several factors could contribute to stabilisation over time, including an increased medical understanding of the virus, improved public awareness and more co-ordinated efforts by governments to manage risk. Some experts have also suggested that the warming of the weather in the Northern Hemisphere as it progresses deeper into spring will assist in slowing down the spread of the virus.
The sharemarket declines on Monday 9 March 2020 were driven by steep falls in the oil price due to Saudi Arabia and Russia engaging in a price war on oil. We are monitoring situation closely and note that while this has resulted in short-term impacts on sharemarkets, a lower oil price alongside falling mortgage rates, can assist in the recovery of consumer confidence over the medium-term.
Super is a long-term investment. Depending on your age, it's likely to be invested for at least another 15 to 20 years.; leaving most well placed to ride out the rise and fall of markets. Because of this, legalsuper takes a long-term approach to managing our MySuper and member choice portfolios. We ensure that our portfolios are well diversified across high-quality investment managers and assets across shares, fixed interest, cash, property and alternatives.
Our diversification helps to manage volatility and downside movements in periods of uncertainty such as now.
To put the impacts for legalsuper in context, while MySuper balanced investment returns were negative at -3.5% for the month of February 2020 largely due to the market correction, over the full current financial year to 6 March 2020 returns were positive, at +2.5%.
Over longer timeframes, strong historical returns have been delivered to 31 January 2020:
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(These are returns for legalsuper's MySuper balanced option, these are net of all tax and fees except the weekly account fee ($1.30 per week) Past performance is not necessarily an indication of future performance. )
The investment performance for all of legalsuper’s investment options are available here:
In times of volatility it is important to be cautious of crystallising short term losses; remember to consider your long term perspective, and seek advice from a qualified financial adviser.
If you want to learn more about your level of investment risk or if you’re close to retirement, you can speak with a member of our team. they can help you with the appropriateness of your investment strategy and may help you feel more comfortable.
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This investment commentary is general information only and should not be considered to be personal advice This information does not take into account your specific needs. You should consider your own financial position and objectives and read the legalsuper Product Disclosure Statement before making any decision in relation to your legalsuper investment.
Market volatility update
At the time of writing, the impacts of the Coronavirus are escalating. This update is to keep you informed of rapidly changing situation and the potential impacts on superannuation investments.