Defensive positioning to protect NGS from coronavirus fall-out

Industry superannuation fund NGS Super believes its defensive positioning via exposure to alternative assets will help protect its portfolio from the fall-out in stockmarkets from the coronavirus.

Stockmarkets had reacted negatively to the recent outbreaks, with global shares experiencing sizeable falls over the last few days. Markets in the US fell by more than 7% while the UK’s FTSE 100 fell by 8% in one day.

Ben Squires, chief investment officer at NGS Super, said the negative impact would be felt in the firm’s investment options with exposure to stockmarkets but would be lessened by its alternative assets.

“From a portfolio perspective, the negative impact is largely contained to the investment options with a greater exposure to share markets. The diversification across the investment options provides some immunisation and therefore lessens the impact of negative share markets.

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"The investment options have a good amount of exposure to bonds, infrastructure, property and other defensive alternatives, which continue to perform well as share markets fall.

“In addition, our share portfolio is more defensively positioned and our expectation is that the NGS Super share portfolio will outperform the market."

This defensive positioning meant the super fund was holding off on making any changes to its portfolio positioning but would continue to monitor the situation. It also felt there were ‘attractive’ opportunities in various asset classes which it might look at to take advantage of in due course.

“We continue to monitor our portfolio and markets closely, assessing the need to either provide more protection or alternatively take advantage of attractive prices across various asset classes,” Squires said.

“Given the diversification benefits received from the alternative assets held in the investment options, we continue to maintain our current asset allocation.”

NGS would continue to provide updates on portfolio performance, but said it was important not to react in the short-term.

“While we take an active approach to monitoring the markets as they react to events like these, it’s also important to remember that superannuation is a long-term investment,” Squires said.

“Markets cyclically rise and fall, and our portfolio is designed with the aim to level out fluctuations in order to achieve the long-term retirement goals of our members.”