market changes and your super

When the world’s markets move, it’s natural to feel concerned about your investments. Rest assured that HESTA has guided our members and their investments through many major market challenges over more than 35 years. 

But super isn’t just about us, it’s about you and the life you want to live in retirement. To build your confidence in making the right decision, it can be helpful to learn a bit more about what’s going on with the markets, what you can do, and what HESTA is doing to navigate you to a more secure retirement.

what's going on in the market? 

Over the last few years, we’ve seen a lot of news about markets swinging up and down both in Australia and globally. This is known in finance as market volatility.

Volatility is simply how often and how much investment prices change. Just like how a storm causes bigger waves in the ocean, asset prices go up and down when investors react to global events and trends. Bigger events cause bigger waves, and the peaks and troughs make the biggest headlines. The overall rise and fall generally occurs over an interval of time, which is called the investment cycle.

Why people get concerned

It can be worrying when you’re in the trough, but there’s a reason we feel so bad when this happens.

First, we all have a bias to feel recent events are more important than long-term trends (also called recency bias¹). Even some professionals have this bias, so having investment principles and frameworks to reduce bias and keeping long-term goals in mind can help mitigate concerns.

Then there’s the loss aversion bias. What this means is that our brains will want to avoid a potential loss even more than we want to gain an equivalent amount. For instance, if you feel your investments may fall further, your brain will bias you towards taking action to avoid that rather than waiting or seeking out further advice or information.

These biases perhaps helped our ancestors survive and are reasons why market volatility feels more concerning in the short term. However, they can also cause us to make hasty decisions.

What does this mean for your super?

Super, like every investment, will have ups and downs. Super is a long-term strategy, and HESTA has a history of delivering strong long-term returns for members.

While market volatility is highly publicised in the short term, the graph below shows that even events like the 2008 Global Financial Crisis and COVID-19 are temporary in the context of 20 years of growth in a super product. The example chart below tracks a hypothetical $100,000 that was invested in 2003 in the HESTA Balanced Growth accumulation option.

During 2020 and COVID-related market turbulence, it would have fallen from a high ($367,649) in 31 January 2020, but would have recovered completely ($372,272) by 30 November the same year, or within 10 months. Likewise, the turbulence in 2022 caused a dip from a high in 31 March 2022 ($424,080), but would have recovered by January 2023 ($438,324), again 10 months.

Example: Growth of $100,000 over 20 years (Accumulation only)

Graph depicts scenario: $100,000 invested 1 July 2003 to 30 June 2023 in HESTA Balanced Growth. Calculations are performed on a fixed value over the stated date range and do not take into consideration any transactions (contributions) or deductions (administration/insurance fees and costs) or other entitlements (LISTO, Co-Contributions). Returns are net of investment fees and costs, transaction costs and taxes. Past performance is not a reliable indicator of future performance.