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‘Out of fear': Members urged not to do one thing in sharemarket sell-off

‘Out of fear': Members urged not to do one thing in sharemarket sell-off

News.com.au21-04-2025

The net wealth of Australians has fallen on the back of US President Donald Trump's tariff plans.
Figures released by Chant West show the median superannuation balanced option, which has 61 to 80 per cent of the money invested in shares, fell 1.9 per cent in March.
Worst still, these funds are currently estimated to have fallen a further 2 per cent in April following the rapid fall and recovery of shares earlier in the month.
However, Chant West says this estimate could become stale quickly given some of the wild daily market movements.
Chant West figures are the first showing of the cost to everyday Australians since the US President evoked his tariff policies, stoking fears of slowing economic growth.
The share sell-off began in late March off the back of Mr Trump announcing 25 per cent tariffs on select items including steel imports.
President Trump's so-called 'Liberation Day' blanket tariffs on April 2 sent a shockwave through share markets and then a week later, a pause on some of these tariffs resulted in a market rally.
Chant West senior investment research manager Mano Mohankumar said in times of market volatility it is critical members keep in mind superannuation is a long-term investment and there are going to be periods of market weakness.
'While we appreciate that members all have different tolerance levels for seeing their account balance going backwards, the majority can afford to remain patient, even many older members,' Mr Mohankumar said.
Despite the falls, the research shows retirees with the median super fund were still 5.5 per cent up over the nine months of the 2024 financial year.
'When markets fall sharply, there is a tendency for some people to think about moving to lower-risk options or cash, with a view to moving back later, either out of fear or as an attempt to time the market,' Mr Mohankumar said.
'But far more often than not, that strategy results in a worse long-term outcome than if you stay the course.'
'Not only do you convert paper losses into real ones, but you also risk missing part, or all of the subsequent market rebound.'
Mr Mohankumar also pointed to superannuation members benefiting from diversification with the losses in the share market greater than what members are experiencing.
'Taking the full month of March as an example, we saw Australian shares retreat 3.3 per cent over the month while international shares were down 5 and 4.7 per cent, in hedged and unhedged terms, respectively,' he said.
'However, the median growth fund's loss was limited to 1.9 per cent, benefiting from diversification across a wide range of growth and defensive asset classes including alternative and unlisted assets.'
The average median superannuation growth fund has delivered an 8 per cent return on average since the introduction of compulsory super in 1992.

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