Diversification and why it matters to super

The recent turmoil in financial markets offers a timely reminder of the benefits of diversification.

What is diversification?

Diversification is an investing strategy that can assist in managing risk. Heard the saying, don’t put all your eggs into the one basket? The same principle should be considered when managing super investments. Diversification may be as simple as spreading super into different types of investments so that the exposure to any one type of investment is limited. Over time, this can help to reduce risk while still allowing super investments to grow.

Why diversify?

Financial markets can be unpredictable at the best of times. Because super is invested in financial markets that go up and down, super returns will generally be affected by these market moves. Diversification won’t totally protect against a loss when markets go down, but it can help reduce risks. By building a portfolio that includes different types of investments that perform differently to each other over time, if one falls in value, another may perform well enough to make up for such losses

How does Rest diversify my super?

The level of diversification in your Rest super investment depends on the option you have chosen and can be found in the Rest Investment Guide.

If, for example, you have invested in the Rest Core option your Rest super investment will have exposure to the following asset classes: cash, debt, Australian shares, overseas shares (including private equity), property, and infrastructure. It will also have exposure to alternative assets such as agriculture. These asset classes are further diversified within their own asset class, across different investment managers, as well as across different industry sectors and geographic markets.

Rest’s investment team use these assets to create diversified portfolios not just to help protect retirement savings against the risk of loss over the longer term, but also to help provide more stable returns over the longer term.

Check your investment choice is right for you

Before choosing an investment option(s), you should consider your risk appetite and return objectives. In just 7 minutes, Rest’s Digital Advice Investment Choice Solution will ask you some simple questions to help you learn more about your investment risk profile and give you advice on which Rest investment options are recommended for you.

Members have access to a range of Rest’s Digital Advice solutions available 24/7 at no additional cost.