With average super returns falling by 4.3% in 2022, Australian Retirement Trust (ART) has stressed how well-diversified portfolios can combat market volatility in 2023.
On a recent investment market update podcast, ART’s chief economist, Brian Parker, described the past year as a “challenging time for markets and certainly a really worrying time for many of our members”.
Parker reminded ART members that superannuation was a long-term investment game, following the super fund’s negative performance during 2022.
“Even though there’s potentially light at the end of the tunnel, it’s still going to be a challenging time for the next little while,” he continued, noting geopolitics as a key source of global volatility in 2023.
Despite this, high levels of Australian consumer spending, alongside European and US investment performance, were reasons for optimism when looking ahead.
“Generally speaking, the economy is holding together a lot better than we might have thought a few months ago,” Parker said.
Diversification in asset classes was a crucial tactic to combat further volatility, setting up the fund for medium to long-term returns. The economist explained that this would additionally uphold investment objectives communicated in product disclosure statements.
Parker added that ART would take advantage of weaker share prices, buy into bond markets when yields rose and focus on alternative assets such as property and infrastructure.
“[These assets] tend to help cushion the blow during difficult financial market conditions,” he said.
Investment flows towards airports were also identified to see further recovery, as ART members could benefit from the increasing number of flight passengers.
Parker urged members who felt extremely worried about market conditions, particularly those approaching retirement, to seek financial advice.
