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One of Australia’s top superannuation fund providers is cautioning against making knee-jerk investment decisions during volatile times.
HESTA said it saw an uptick in investment switching during the market pullback in early April, which was prompted by US President Donald Trump announcing he would impose steep tariffs on America’s trading partners.
It said those who switched generally moved towards more defensive options such as cash and term deposits.
But historical data showed that investment switching reached a peak about the same time that markets hit their nadir.
Those who switched out of growth funds in early April missed the subsequent rebound.
HESTA MySuper Balanced Growth is up 8.0 per cent since the April 2 tariff announcement and the benchmark ASX200 has grown 12.7 per cent, while HESTA’s cash and term deposit option has returned just 1.82 per cent.
The fund said it also saw a similar switching pattern during the COVID-19 pandemic and the inflation-driven correction of 2022.
“We recognise market volatility can be unsettling, but history shows that staying invested through the markets regular ups and downs has delivered strong long-term returns for our members,” HESTA chief executive Debby Blakey said.
“Making snap decisions based on short-term market moves can mean locking in losses and missing out on the eventual market recovery.
“This can result in tens of thousands of dollars less at retirement.”
Ms Blakey said if members felt anxious, the best thing to do was to seek advice based on individual circumstances.
It was also important that people engage with their super more than just during market events, she said.
Derek Rose
(Australian Associated Press)
