What has caused the recent market downturn?
In recent days US stock markets fell following President Trumps announcement of new tariffs on Canada, Mexico, and China.
These measures led to retaliatory tariffs from the affected countries. China, Canada, and Mexico immediately announced new tariffs on American exports, fuelling uncertainty in global markets.
The sectors that were hit the hardest were:
- Automobile Industry
- Retail sector
- Technology sector
What is BUSSQ doing during this period of market volatility?
It is unfortunately impossible to eliminate the ups and downs that we see in financial markets. BUSSQ has been defensively positioned with a lower allocation to equities and a higher weighting to quality blue chip stocks and less exposure to the highly priced technology stocks. This approach aims to put us in a better position with our exposure to global markets.
What does the market volatility mean for you?
Periods such as this, are painful to experience and we understand the stress and tension that a market downturn can create.
During such periods you may lose confidence in a solid, long term investment strategy, and make a change to hold an asset that may feel safer, such as cash. Even a 65 year old member, with an average life expectancy of 15-20 years1, is considered a long term investor2.
Holding cash over such long time periods is less likely to lead to successful retirement outcomes compared to taking a diversified approach to your investments.
Market downturns like this do happen, and on each occasion, history has shown that markets eventually recover their losses and go on to achieve new highs.
The graph below shows an example of the volatility that US markets have experienced over time from 1995 to 2024. It's possible to see that over time, markets recover from each correction. If you aren’t invested when those recoveries occur, then you might end up bearing the pain of the losses without any of the benefits of the eventual recovery, whenever that might occur.
Timing these events is extremely difficult, even for investment professionals.
What to do with your super?
Everyone has different personal circumstances, and the impact of a market downturn is different for each of our members.
If you are younger and not looking at retiring for another five years or more, then our message is simple, do not panic. However, we understand this is easier said than done.
Switching to a safe investment option like cash may only lock in any losses incurred already and could place you in a position, if the market recovers and rises again, that misses out on the market recovery.
We know that members nearing retirement can plan to use their superannuation to create a long term income stream to support their retirement. These members may wish to review their investment allocations to ensure they are appropriate, and we are here to help you with those decisions.
If you are in retirement this can be a difficult time. We know many of our retired members have had their income streams set up with a cash allocation that their pension payments are coming from. This is also our default set up for these income streams. This set up is specifically designed to ride out times like now, so you are not forced to sell assets that have decreased in value to fund your lifestyle. If you are uncertain, we suggest you talk to one of our experts and we are committed to being available to members to have these conversations.
How can we help you?
If you have questions about your current investment strategy or if you’re thinking about switching investment options due to market volatility, we encourage you to talk to us before doing so.
Seeking personal advice from a Financial Planner is also a sound approach and can be a source of comfort and strength during stressful times. As a BUSSQ member you have access to personal financial advice on investment choice at no extra cost*. Call us on 1800 692 877.
1https://www.abs.gov.au/statistics/people/population/life-expectancy/latest-release
2https://moneysmart.gov.au/how-to-invest/develop-an-investing-plan
*Personal advice is limited to BUSSQ products and is advice on insurance, investment choice, contributions and retirement. The cost of this advice is included in the administration fees and costs. Personal advice is provided by one of our financial planners who are Authorised Representatives of Industry Fund Services Limited (IFS) (ABN 54 007016 195 AFSL 232514). IFS is responsible for any advice given to you by its representatives.
