Rest CIO reflects on positioning for volatile time

This financial year has been “the toughest for decades” according to Rest Super chief investment officer, Andrew Lill.

The firm’s Core Strategy (Super) had returned 0.23% in the three months to 30 September while the Balanced (Pension) option had returned 0.37%.

Rest said share markets had recovered well during July and August but gains were eroded in August and September as a result of increasing uncertainty around high inflation, interest rate rises and the negative impact of the war in Ukraine.

It expected this volatility to remain during 2022 and had been positioning defensively in anticipation of a more uncertain outlook. This meant a lower allocation to growth assets, higher allocation to cash and investments in unlisted assets such as infrastructure, property and agriculture.

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Lill said: “While still early days, this financial year has so far been one of the toughest for financial markets for decades.

“Market corrections are normal- and to some extent expected. The fact that their timing can’t be predicted makes them challenging.

“The weakness in September is a timely reminder that in the short-term markets can be very volatile. However, over the longer term this volatility is generally smoothed out and these periods of uncertainty often provide excellent opportunities to acquire great investments at cheaper prices.”