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US elections and COVID-19 update

By Brian Parker, Sunsuper Chief Economist

9 November 2020

 

It’s important to ensure that the Sunsuper investment option you have is right for you – for your stage of life, financial needs and goals and appetite for risk. Our enduring guidance to members is that superannuation is the longest-term investment most of us will ever have and that as long as you have an investment strategy that’s appropriate for you, then there is rarely any need to change your investment strategy in response to short-term market volatility. Market downturns, financial crises and periodic recessions are an inevitable part of investing for the long-term.


This has been an extraordinary year. The COVID-19 pandemic and global efforts to contain it led to a sharp downturn in world share markets in March and the most severe global recession in many decades. We also need to remember that every market downturn, every crisis, every recession comes to an end – bar none. And while many uncertainties remain, this crisis is no different. There is an economic recovery underway, even though the recovery is likely to be very gradual, highly uneven and vulnerable to setbacks – particularly related to progress in containing the virus.


Over recent weeks financial markets once again came under pressure – share markets declined in the second half of October as infection rates in the UK and Europe rose dramatically, resulting in renewed lock-down measures being put in place. In the US, rising infection rates and uncertainty over the US elections also weighed on market sentiment. 


However, in the days leading up to the US election, markets became increasingly confident that Joe Biden would win the Presidency, the Democrats would retain their majority in the House of representatives and perhaps gain control of the Senate. In the event, a Biden victory has been greeted positively by financial markets. However, we won’t know which party will win control of the Senate until run-off elections in early January 2021 in the State of Georgia.  


Since the COVID-19 low-point for world share markets in March to the end of October, Sunsuper’s Balanced option has returned around 15 per cent, despite some reasonably significant falls in world share prices in the final two weeks of October. In the days following the US election, share prices have continued to rise. 


While we recognise that every crisis create opportunities that Sunsuper and our investment  managers seek to capture, we have no way of knowing with any certainty how the COVID-19 outbreak will evolve from here, or precisely how the economy, political environment and financial markets will evolve over the short-term. We do not invest money based on our own, or anyone else’s short-term economic or market forecasts or prognostications about election outcomes. We build well-diversified portfolios that are designed to achieve the medium to long-term real return objectives as documented in our product disclosure statement. 


Help to choose your investments

There are a number of Sunsuper investment options that give exposure to a diversified range of asset classes, including both public market and unlisted investments. In fact, Sunsuper offers members a range of 20 investment options to allow you to tailor your investments to your needs.

If you want more information or advice to decide which investment option or group of options best meets your needs, our financial advisers are here to help. Please give Sunsuper a call on 13 11 84.


Past performance is not a reliable indication of future performance. Sunsuper employees provide advice as representatives of Sunsuper Financial Services Pty Ltd (ABN 50 087 154 818 AFSL No. 227867) (SFS), wholly owned by the Sunsuper Superannuation Fund.