CareSuper has responded to the volatility in Europe by focusing on companies with strong earnings and cashflows, as well as assets that rely on income rather than price growth, according to CareSuper general manager for investments Greg Nolan.
Conservatism was the dominant theme in CareSuper's balanced option as the situation in Europe looked increasingly unstable, Nolan said. With the resignation of Italian prime minister Silvio Berlusconi and Greek prime minister Georgios Papandreou, the yields of sovereign bonds in both countries have soared above 7 per cent.
But it is not all "doom and gloom", according to Nolan.
"One key reason for tempered optimism is that it appears to be in no one's interest for the Eurozone to fall apart," he said.
"Market volatility is set to continue until there are signs of agreement in Europe and clearer pictures emerge regarding global economic growth. However, there do appear to be slight improvements in other areas of the global economy, which may mean markets decouple from the European malaise," Nolan added.
The US looks likely to avoid a recession; economic news in China is better than expected; and Australia's unemployment rate has fallen from 5.3 per cent to 5.2 per cent, Nolan said.
"We remain focused on long-term investing and continue to believe in our role to look through the noise and rely on strong, tested investment theses to determine our asset allocation and stock selection," he said.
