13 March 2020
What is happening in the market?
An increasing number of members have contacted us, concerned about recent share market falls and future risks of the new coronavirus.
As the outbreak of the Coronavirus (COVID-19) continues to create international headlines, Vision Super is closely monitoring this situation as the number of reported cases grows globally. In response to this evolving issue, members of Vision Super’s Management Group are meeting regularly to discuss our approach to managing the impacts of the Coronavirus.
Equity markets have become very volatile with initial substantial falls. This has been due to the corona virus but also due to a large fall in oil prices which has impacted energy companies negatively. This situation may change within a very short period. Markets are experiencing unusually large up days as well as down days. Currencies and commodity markets have also been affected. The virus itself continues to spread and is becoming more and more difficult to contain.
Members in the default Balanced Growth option are in a well-diversified option with a mix of growth and defensive assets. This option has a long-term investment horizon. Over the 20 years to end February 2020 it had provided members with a return of 6.5% p.a. Over this period, we have had a number of years with negative returns including during the GFC. Options with exposure to growth assets may have noticed a fall in their account balances. We expect peak to trough falls of 20% or more once every three years on average. Nonetheless equities have been the strongest performing asset class over the long term. The fourth quarter of 2018 was the last such period of a 20% loss with equity markets recovering strongly subsequently. If you are concerned about your financial situation and want to review your investment strategy you may wish to seek investment advice.
To book an appointment with a Vision Super financial planner, complete the online form or call the Contact Centre on 1300 300 820 (Monday to Friday 8:30am to 5pm) to arrange an appointment. Advice on certain single superannuation issues like your investment option can usually be provided at no cost to you, over the phone.
Vision Super’s Investment approach – balanced growth option
Vision Super has reduced risk over the last few years as markets strengthened. We took a more defensive position after the onset of the crisis in Europe as the characteristics of the virus became clearer. However, we do retain exposure to equities alongside significant exposures to cash, bonds property and infrastructure. These asset classes are not directly impacted by share market performance. We note the crisis is evolving rapidly and we may change our allocations quite quickly. We note that within a relatively short timeframe, the pandemic will resolve itself one way or another and there will be a return to some form of normalcy.