Looking beyond the headlines on coronavirus (COVID-19)

As news of the coronavirus disease dominates the headlines, we know that some members may be concerned about its effect on global markets and, in turn, their superannuation.

First and foremost, it’s important to remember that while newspapers and television news trade in headlines day-by-day (if not hour-by-hour) to garner clicks and viewers, investment markets operate on a long-term basis.

Though uncertainty around different global issues cause fluctuations in the short-term, markets generally rebound and confidence returns.

We recently saw this with both Brexit and the US-China trade deal issues. As we wrote in our December 2019 quarter market update, the will-they-won’t-they nature of both these events caused a degree of angst over the last year. The initial resolution of these issues in January 2020 gave the market the confidence it needed to once more go about its business.

Similarly, the market will draw confidence from the measures that have been put in place around the world to deal with the coronavirus. As governments and health organisations work to limit the spread of the virus and help those affected, economic organisations too are doing their part to limit the effect on the global economy.

In a statement released on 28 February 2020, chair of the US Federal Reserve, Jerome Powell reassured the world that the “fundamentals” of the US economy remain strong.

“The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy,” he said.

Most importantly, we can also draw confidence from the fact the world has effectively dealt with a number of global health crises in the not-too-distant past.  Over the last 20 years alone, the world has experienced outbreaks including SARS, Ebola, and Swine Flu, and over time contained all of them.

Qantas Super’s safety-first approach to managing your super helps to both capitalise on periods of growth and protect your super through periods of market uncertainty.

We are able to do this through our focus on investing for the long-term and being well diversified by building portfolios with investments that complement each other.

This means your super is not just invested in the share market; it is invested across over 5,000 investments such as shares, property, infrastructure, timberland, agriculture, a variety of bonds, and cash.

Having your super spread across these different types of investments is designed to smooth the ups and downs that may be experienced by any one category of investment type, and allow your super to keep performing in the long-term.

With this in mind, it’s important to remember that each of our investment options, except Cash, has an investment horizon of at least three years, which gives your super ample time to weather market fluctuations.

While it may be tempting to change your strategy when you see share markets falling, it can often make more sense to either stay invested or consider investing more.

In fact, by switching to a lower risk option in a downturn, you risk selling out at a time when prices are low, rather than taking advantage of falls when markets recover.