Will your super fund recover this year?

“Equities got so whacked last year but … bonds got whacked more. It’s the two happening together that caused the chaos,” he said. “We know markets always recover, the only question is how long it will take.”

On Thursday, ANZ’s global market outlook forecast a challenging time for investors this year, with markets to remain under pressure. Equities are likely to struggle as earnings begin to reflect a recessionary environment, demand weakens and margins falter, said ANZ Private Bank head of investment strategy Lakshman Anantakrishnan.

“2023 will be hard-pressed to outdo the challenges that financial markets faced in 2022, however this year is unlikely to be a smooth ride for investors,” he said. “While the macro outlook will remain challenging, unlike 2022 there should be ample opportunity for investors this year – where and when remains the question.”

KPMG’s head of asset and wealth management, Linda Elkins, said the three major challenges super funds had grappled with last year were rising interest rates, rising inflation and uncertainty caused by the way in Europe.

“I think it’d be fair to say the uncertainty is continuing into this year with the same factors,” she said.

“But I think looking at those long-term returns is the real key to this, to understand just how well super funds have on the whole – certainly the quality performing funds – managed investment markets.”

She said a long-term view was vital, despite the bumps still predicted for the next 12 months. Retirees who switched their investments into higher growth options or shares to replace the returns they have lost through low-interest rates will be finding these markets a bumpy ride, she said.

“Being reactive around lower returns can mean that you’re just taking on more risk. That can, of course, be great or not great.”

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Elkins said for those who were worried about last year’s negative returns and the economic outlook, they should firstly check whether they are in a MySuper fund, the default products, or a choice fund, where members have greater control and flexibility. They should then make sure they are in a well-performing fund, and also consider whether they want to access professional advice to help them with their decisions.

Chant West’s Mohankumar said when investment markets fell sharply, there was a tendency for some people to panic and consider moving their money into less risky investment options or to cash.

“We caution members about the perils of attempting to time the market,” he said.

“Far more often than not, it results in a worse outcome in the long run than if you stay the course. Panicking only converts paper losses into real ones. Not only that, you risk missing out when markets rebound – as they will at some point.”

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