Stock market correction, not crash
Wednesday, 7 February 2018
After a strong December quarter and good start to 2018, the Australian stock market has sharply corrected, following recent falls in the United States (US) stock market. Around the world, stock markets have reacted to the prospect of interest rates potentially rising more aggressively than expected in the US and its potential impact on global economic growth. In Australia, the ASX 200 has returned to levels last traded in October 2017.
While these market movements have dominated media headlines, share markets have enjoyed an extended period of strong, unabated gains over the past 12-18 months. After successive record highs, markets arguably were due for a correction.
Keep calm and carry on
Fluctuations in the value of your investments and news of a market correct can be unsettling. But studies in behavioural finance show the greatest losses occur because investors jump in and out of the market at exactly the wrong time. Such actions may work against your investment goals over the long term.
For now, while interest rates are rising, they remain at historic lows, and at close to zero or below zero across most countries in real terms (i.e. net of inflation). At the same time, economies around the world are in far better shape than they were a year ago. Even five years ago. And, global economic growth remains strong while profits are rising.
Finally, it’s important to remember that superannuation is a long-term investment to provide savings for your retirement. Markets have a tendency to over-react to uncertainty. Thus, it is important to stay focused on your long-term investment objectives and review your investments periodically in the context of your investment goals. Rest has demonstrated that it has the capability to manage through changing market conditions, and we remain committed to growing your superannuation savings over the long term.
Rest remains focused on achieving the investment objectives of our investment options
Our investment philosophy is centred on an active investment management approach. This means we regularly review and adjust our investment portfolios to manage risk as market conditions change and also take advantage of opportunities as they arise.
We believe that regardless of the behaviour of the markets, investing is inherently about managing uncertainty and risk and we continue to manage downside risk with the aim of meeting our long term investment objectives.
Rest has reduced its exposure to shares in investment options such as the Core Strategy over the last few years to manage the risk of markets falling and to capture opportunities to deliver competitive long-term investment performance for members
We are here to help
If you would like to talk to someone at Rest for more information, please call us on 1300 300 778 from 8.00am to 10.00pm weekdays. We would suggest you contact Rest Advice before changing your investment strategy. Simple advice about where to invest your super is available at no additional cost for Rest members.
Visit rest.com.au/tools-advice/advice to learn more about how Rest Advice can help.
# This information doesn’t take into account your circumstances. So, before acting on it, you should consider whether it is appropriate for you. Before making a decision about your super, please read the relevant Product Disclosure Statement (PDS) available at www.rest.com.au or call 1300 300 778. Rest financial advice is provided by Rest advisers as authorised representatives of Adviser Network Pty Limited AFS Licence 232729 ABN 25 056 310 699. This information is provided by the issuer, Retail Employees Superannuation Pty Limited, ABN 39 001 987 739 as trustee of Rest (Retail Employees Superannuation Trust ABN 62 653 671 394). Registered office: Level 5, 321 Kent Street, Sydney NSW 2000.