Industry Super Australia (ISA) has reassured investors that COVID-19 will have only a ‘muted’ impact on its portfolios due to its asset diversification and that they should avoid rash actions.
It said, as well as equities, its portfolios also held assets such as infrastructure, cash and property which tended to act in defensive ways.
“Due to the diversity of assets in super funds’ portfolios the losses are likely to be far more muted than the headline-grabbing share market plunges seen on the evening news.
“Industry super funds are particularly well-equipped to deal with short-term shocks to world equity markets because of their investments in infrastructure, property, cash, and other unlisted assets.”
It also warned investors could risk crystallising their losses if they opted to make changes to their portfolio at this volatile time and should remember superannuation was a long-term holding.
During the Global Financial Crisis, savers who exited their holdings from an average balanced industry superfund and went into cash instead were $4,000 worse off after three months and $34,800 worse off after five years, it said.
“If members think about their investment in the long-term what has happened this week will not make much difference to super balances in the 20 years or longer when they start to think about retiring.
“Those planning to access their super soon may not have time to ride out the market volatility and should seek advice on how to limit any losses.
Chief executive of ISA, Bernie Dean, likened the action to holding off on selling a house during a downturn.
“People avoid selling their house during a property market slump because they are worried about making a loss, the same principle should be applied to changing your super fund or investment option immediately after a market drop,” he said.
BlackRock boss Larry Fink praised Australia’s superannuation system in his annual chairman’s letter.
The prudential regulator has announced it will publish new expenditure data of superannuation funds, providing details on expenses like advice, director remuneration, and payments to unions.
Affirming the UK’s growing attractiveness as an investment destination, a number of Australia’s largest investors recently joined the UK Foreign Secretary for an exclusive briefing in Canberra to discuss further opportunities for trade and growth.
The specialist superannuation law advisory practice is set to wind up, with managing partner Jonathan Steffanoni planning to bring a new offering to market.
Add new comment