Last updated: 25 January 2021
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 declined in value during March 2020, but other assets performed well: investors sought safety in government bonds, driving their prices up; and a weaker Australian dollar offset a significant part of the declines in value of unhedged international shares. Further, world share markets started to recover in late March and have enjoyed very strong returns over the December 2020 quarter, regaining much of the losses suffered in the downturn earlier in 2020. 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 market volatility. We monitor developments constantly and closely and are also in constant contact with our investment managers across the globe.
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. The successful discovery of COVID-19 vaccines and the beginnings of their rollout have - rightly - boosted confidence about the medium to longer-term economic outlook. However, that rollout will take considerable time and their are likely to be renewed outbreaks and other setbacks along the way. 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.
During the market volatility of March 2020 we did not reduce our exposure to shares or other growth assets. In fact, we took 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 took this step because after their recent falls, share markets were 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 will have grown significantly as shown in the graph below. (Note: the modelling 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 the most recent bout of extreme volatility in 2020 due to COVID-19.
Sunsuper Balanced option (net) & Retirement option (net)
Cumulative value of $10,000
31 October 2002 to 31 December 2020
Source: Sunsuper, ABS. Past performance is not a reliable indication of future performance.