How Trump move made Aussies poorer
Millions of Australians' superannuation balances fell at the end of February as US President Donald Trump announced his trade tariffs.
Chant West stats show the median growth fund, which is 61 to 80 per cent invested in growth assets like shares, was down 0.9 per cent in February.
This comes off the back of a strong start to the year when the median growth fund jumped 2.2 per cent in January.
Chant West senior investment research manager Mano Mohankumar said volatility crept back into sharemarkets on the back of weaker US economic data and concerns about the potential impact of Trump's tariff announcements.
'In February, both Australian and international shares were down, with Australian shares falling 3.8 per cent,' he said.
Despite the sharemarket wobbles continuing in March, Mr Mohankumar cautioned superannuation members from switching funds.
'With sharemarket volatility continuing into March, and an uncertain economic and geopolitical backdrop, it's an important time to remind members that superannuation is a long-term investment and that throughout their superannuation journey, there will be periods of choppiness,' he said.
'More often than not, it (switching) results in poorer long-term outcomes than if they ride out the ups and downs. And we know that over the long term, there are far more ups.'
Mr Mohankumar said superannuation funds had time and time again weathered difficult periods in the market.
'Most Australians have their super invested in well diversified portfolios with their exposure spread across a wide range of growth-orientated and defensive asset classes,' Mr Mohankumar said.
'That diversification helps limit the damage during periods of sharemarket weakness as we saw in February and March to date.'
Mr Trump's 25 per cent tariffs on steel and aluminium imports came into effect on March 12, with no exemptions and a threat of doubling levies on steel and aluminium from Canada should the country retaliate with a surcharge on electricity exports.
On March 4, the US President raised the tariff on all Chinese goods going into America by 20 per cent. He also implemented a 25 per cent tariff on goods imported from both Canada and Mexico.
Mr Trump said additional sectoral tariffs, as well as a global reciprocal tariff policy for countries implementing tariffs on the US, will start from April 2, 2025.
Mr Mohankumar said superannuation over the long term still performed above expectations.
'Since the introduction of compulsory super in July 1992, the median growth fund has returned 8 per cent a year – well above the typical 3.5 per cent target,' he said.
'Even looking at the past 20 years, which includes three major sharemarket downturns – the GFC in 2007-2009, Covid-19 in 2020, and the high inflation and rising interest rates in 2022 – super funds have returned 7.1 per cent a year, which is still comfortably ahead of the typical objective.'
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