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Your super returns in retirement

Investment markets have taken a hit in recent months. Find out why and what it means for your super.

Investment markets have been challenging for the past 6 months. Economies around the world are facing a perfect storm of rising inflation, higher interest rates and ongoing concerns about economic growth. It’s all resulted in volatile markets and lower returns from your super investments than we have seen in recent years, especially compared with the extraordinary returns we saw last financial year.

Thankfully, even in retirement, you still have a long-term investment horizon, which means it’s the long-term returns that matter most.

Our Balanced Growth option, where most of our retired members are invested, delivered 5.8% p.a. and 7.6% p.a. over 5 and 10 years respectively to 30 June 2022.

Our retirement strategies helped safeguard your savings

Super is a long-term investment, but the reality is that markets move up and down all the time, and short-term downturns can be unsettling. When you are retired and no longer contributing to your super, significant falls like those we’ve seen recently, can be even more worrying.

The good news is that we invest differently for you in retirement. If you’re invested in one of our more conservative investment options, our strategies to manage risk have worked well. They helped cushion the impact of large falls and volatility – which meant your balance remained more stable and fell less than the market overall.

The chart below shows that our Retirement Income Stream Balanced Growth, Conservative and Defensive options performed better than Australian shares and fixed interest and international shares.

stateplus investment charts

Your returns have been resilient despite market falls

Share markets around the world have not performed well over the past 6 months. This means that investment portfolios which include shares, including super funds, have been affected. The good news is that when your super invested in different assets, your losses won’t be as big as overall market drops.

The Australian share market, represented by the ASX 200, dropped around 7% for the year to 30 June 2022, and the global share market, represented by the S&P 500, was down 12%. To put these falls into perspective, the S&P 500 posted its worst first half performance (1 January to 30 June 2022) in 50 years.

Technology companies have been some of the hardest hit. The Nasdaq Index, which has a high concentration of technology companies, has been hit especially hard in the 6 months to 30 June 2022. It is now more than 30% below its all-time high in November 2021. Some of the largest technology companies have also experienced sizeable falls in value. Netflix is down 70%, and Apple and Alphabet have fallen by roughly 23% and 24% respectively.

Even in fixed income securities such as government and company bonds, which are usually seen as defensive assets, we have seen negative returns of around -10% for the year.

Read more about what’s happening in markets now and our outlook for the future.

The beauty of not putting your eggs in one basket

Most of our retirement investment options, and members, are not invested in shares alone. They are invested in a mix of different types of investments – combined to create a diversified investment portfolio.

Put simply, diversification means not putting all your eggs in one basket, but rather combining different investments which typically don’t all go up, or down, at the same time. Investing in a diversified portfolio reduces the risk that any one type of investment doesn’t perform as expected. It also helps smooth out returns, making them more resilient and improving overall returns over the long term.

This year has been a good lesson in the benefits of diversification. Some investments, including shares, went down. But next year these very same investments could have higher returns than others. No one has a crystal ball in investing. Markets and investments will always move up and down over time, and it’s not always possible to predict when that will happen. It’s a normal part of investing and for super it’s the long term returns that matter most.

Looking forward, we’re confident our diversified options, including those with a greater focus on risk management, will continue to deliver growth over time - while safeguarding your super savings, and in turn your income, in retirement.

Stay invested, even in retirement

When markets fall, it can be tempting to switch to investments you might think are less risky, like cash. However, the reality is that switching could actually have a negative effect on your super balance.

Sometimes doing nothing, staying the course, and staying invested can give the best outcome, because switching can mean locking in losses and losing the opportunity of benefiting when markets start to rise.

You may not know that around 40% of the income you receive from your retirement income account will come from the investment earnings on your super balance after you have retired.

The chart below shows the benefits of staying invested in retirement, even as markets move up and down. You can see that staying invested rather than switching to cash when markets fell at the beginning of the Covid-19 pandemic meant your super savings grew more.

aware pension cash chart

As we move forward, you can feel confident that we’re focused on growing your super in retirement, and our investment strategies are well-positioned to help safeguard your savings.

Past performance is not an indicator of future performance.


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  2. Read more about what’s happening in markets now and our outlook for the future
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