Dear Members,
As you are aware, the World Health Organisation declared novel coronavirus (COVID-19) to be a global pandemic on March 11, and this has had a major impact on nearly every aspect of our lives.
World share markets have taken a significant downturn in recent weeks. The investment management team and I continue to monitor the situation closely, and remind members of two things:
- that history has shown markets move in cycles, and
- it is important to focus on long-term investment objectives.
Looking ahead, the near-term outlook for the global economy is less than certain, and weaker global growth is likely for the first half of 2020.
The REI Super portfolios are tilted away from the most expensive assets, which tend to be the most vulnerable to market corrections when they happen. It is important to remember that superannuation is a long-term investment and the REI Super portfolios are focused on member returns over the long term. Instead of trying to predict or guess how this global coronavirus pandemic will unfold in the short term, we are focused on the long-term retirement outcomes of our members.
Changing investment strategies during a downturn can prove risky. Research has shown that investors who attempt to ‘time the markets’ by frequently switching investments generally perform badly over the long term. At the last major market decline – during the Global Financial Crisis (GFC) – Industry Super Australia found that savers who moved their money from an average balanced industry fund into cash were $4,000 worse off after three months, $13,800 after a year, $34,800 worse off after five years and after seven years would have lost a whopping $46,000 of potential retirement savings.
If you are considering changing your investment strategy, make sure you speak to a licensed or appropriately authorised financial advisor before you take action.
REI Super members have access to professional and cost-effective advice as part of their membership, so call the Member Helpline on 1300 13 44 33 if you need to discuss the investment strategies that are appropriate for you.
Jarrod Coysh
Chief Executive Officer
REI Super
Coronavirus and your super
What’s happening with my super?
With the volatility in equities that comprise the REI Super portfolios, this has resulted in a decline in the value of the REI Super portfolios.
Since the start of the market volatility (from 21st February) we have seen markets whipsaw up and down within a single trading day. While there have been days where share markets have recorded material losses, there have also been days where markets have bounced from the previous day’s lows.
Given this environment, the performance of the portfolios has also been variable.
It is important to remember that one of the benefits of investing your super in a diversified portfolio, is that the underlying investments have different risk and return drivers, which means that they can behave different to each other.
It is impossible to attempt to predict how long or how severe the coronavirus episode will be. It is likely that investment markets will be volatile until we see a peak in the number of infections.
What does history tell us?
From Black Monday in 1987 to the GFC in 2008, the stock market has faced a number of landmark declines. It is, however, vital to remember the cyclical nature of investment markets, as each of these periods of volatility was followed by another of growth and recovery.
While no two downturns are the same, the message then is the same now: don’t panic.
In the period following the GFC, between 1 March 2009 and 31 May 2016, ratings agency SuperRatings found that REI Super was one of only eight superannuation funds to achieve an accumulated return of more than 100 per cent on its Balanced option. In other words, we were one of only 8 funds to have doubled our members’ money over the period – and that’s even without the benefit of contributions. Our Balanced option achieved a 100.6 per cent accumulated net investment return* between 1 March 2009 and 31 May 2016. Past earning rates are not an indicator of future earning rates.
What next?
With superannuation being a long-term investment, it is more important than ever to focus on long-term objectives. This means thinking carefully before making any changes. REI Super members have access to professional and cost-effective advice as part of their membership, so call the Member Helpline on 1300 13 44 33 if you need to discuss the investment strategies that are appropriate for you.
Our employees
REI Super has undertaken steps to ensure the protection of the health and safety of our employees, while continuing to meet the needs of our members and employer members. We have moved quickly and are working with our service providers to minimise any potential disruption.
* The benchmark is the median super fund balanced option, as reported in the SuperRatings Crediting Rate Survey June 2016
Future investment performance can vary from past performance, and you should not base your decision to invest in REI Super simply on past performance. Past earning rates are not an indicator of future earning rates. The investment returns of REI Super are not guaranteed, and the value of the investment may rise or fall.
The information contained in this article does not constitute financial product advice. However, to the extent that the information may be considered to be general financial product advice, REI Super advises that REI Super has not considered any individual person’s objectives, financial situation or particular needs. Individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation. Members should obtain and read the Product Disclosure Statement for REI Super before making any decisions. REI Superannuation Fund Pty Ltd ABN 68 056 044 770 AFSL 240569. RSE L 0000314 REI Super ABN 76 641 658 449 RSE R1000412 MySuper unique identifier 76641658449129 March 2020