Last updated: 16 June 2020
Our goal is to carefully construct diversified investment portfolios with a view to meeting their medium to long-term investment objectives.
Your super is most likely invested in more than just shares
Most members’ super savings are not fully reliant on the performance of share markets. Why? Because most members’ super is invested in a diverse mix of assets, not just shares. So yes, returns on your super investment will likely have been sharply negative over recent weeks, but they won’t have been as negative as the performance of share markets.
Members with their super invested in Sunsuper’s Balanced option have just 50.8% of their balance in shares. Members with their super invested in the Retirement option have just 33.8% of their balance invested in shares.
Yes, shares have declined in value, but other assets have performed well: investors have sought safety in government bonds, driving their prices up; and a weaker Australian dollar has offset a significant part of the declines in value of unhedged international shares. And because we maintain substantial exposures to unlisted asset classes – Private Capital, Property, Infrastructure – our diversified investment options are less exposed to short-term market volatility than many of our competitors. While these assets are not immune to major and prolonged economic and market downturns, they tend to hold their value to a greater extent that shares.
Your super may be automatically invested away from shares as you get older
If you haven’t made an investment choice for your super savings, your balance will be invested in Sunsuper’s default Lifecycle Strategy. How does the Lifecycle Strategy work? Until you’re 55, we’ll invest your savings in our Balanced Pool, which has the same mix of shares and other assets as the Balanced option. Once you reach age 55, each month we’ll gradually reduce your exposure to shares. By age 65, you’ll be mainly invested in our Retirement Pool (90%), with some of your balance in Cash (10%). We do this to reduce the impact of market downturns, like this one, on your retirement.
How is Sunsuper responding?
Our investment team is highly experienced and well qualified to manage your superannuation investment through this market volatility. We are monitoring developments constantly and closely and are also in constant contact with our investment managers across the globe.
Unfortunately, like every other investment manager, we have no way of knowing with any certainty how the COVID-19 outbreak will evolve from here, or how the economy and financial markets will evolve over the course of this year. But at Sunsuper, we don’t invest money on the basis of our own, or anyone else’s short-term economic or market forecasts. Our goal is to carefully construct portfolios with a view to meeting their medium to long-term investment objectives. For our diversified investment options, we build portfolios that are well diversified across different asset classes, different countries and regions and different industries. That goal and approach hasn’t changed.
Despite this uncertainty and volatility, we are not reducing our exposure to shares or other growth assets. In fact, we have taken the opportunity to modestly increase our exposure to domestic and international share markets across our diversified options in a careful and risk-controlled manner. We have taken this step because after their recent falls, share markets are now much more attractive value than either fixed income or cash investments.
Investing in alternative asset classes
Sunsuper continues to hold a significant allocation to alternative asset classes, particularly the key unlisted asset classes – property, infrastructure and private equity. We hold these assets because they deliver strong, long-term returns, while reducing our members' exposure to share market volatility – particularly in times such as these. These assets are not immune to market and economic shocks. Given the state of the world and Australian economies, the value of these assets has declined, and this has been reflected in unit prices and the performance of Sunsuper’s funds. However, in a crisis such as this, these assets tend to hold their value to a greater extent than Australian and international shares.
Read more about how Sunsuper is managing the illiquidity risk of our alternative asset investments and how we value our alternative assets.
Sunsuper’s long-term performance
Superannuation is a long-term investment – potentially the longest-term investment many of us may ever have. The system was set up to help Australians fund their retirement. You generally can’t access your money until you reach your preservation age (currently 57) and retire, or turn 65.
Because of the long-term nature of super, our goal is to carefully construct diversified investment portfolios with a view to meeting their medium to long-term investment objectives. And our performance over the long-term remains strong.
An illustration of Sunsuper’s long-term performance
If you started your superannuation journey in 2002 with $1,000 invested in either our Balanced or Retirement options, your balance (as at 16 March 2020) will have grown significantly – to $3,300 in the Balanced option and $2,700 in the Retirement option. While this allows for investment fees, but not administration fees, it assumes no insurance premiums were deducted and no other contributions were made along the way.
The graph shows how these returns compare to if you invested your $1,000 in line with CPI. It also shows that the growth in your investment has occurred despite both the market downturn during the global financial crisis in 2008, and this current bout of extreme volatility.
Sunsuper Balanced option (net) & Retirement option (net)
Cumulative value of $10,000
28 February 2003 to 31 May 2020
Source: Sunsuper, ABS. Past performance is not a reliable indication of future performance.