Whilst it is hard to ignore the recent weakness in global and local share markets it is important to remember super is a long term investment and periods of volatility can be expected to occur from time to time.  History shows that it generally pays to stay focused on your long-term goals, even in retirement.

Whilst the size of the recent fall means that all investment options that hold shares are negatively impacted, it is important for you to know that ESSSuper is thinking about the risks and proactively managing your super. Importantly, the Fund has a strategy to diversify our portfolios by investing in other growth assets (not just shares), and to some extent this will help protect your investments with us.

Further to this, the Board recently took the decision to adjust foreign currency holdings against the US dollar. This decision has helped limit the fall in value of our overseas investments.

Why is this happening?

Renewed tension in Europe and ongoing concerns about the global economy are the main reasons for the market weakness as investor seek safe havens.

However, it is important to realise that Central Banks are acting to try and address these issues leaving interest rates unchanged and adding to liquidity. Whilst concerns still remain for the banking system and peripheral Europe (i.e. Portugal, Ireland, Greece & Spain), core European economies (i.e. Germany & France) are robust, benefiting from low interest and exchange rates.

Whilst the downgrade by ratings agency Standard & Poor’s of US Government Debt was broadly factored in by the bond market, it is another factor that is likely to leave markets nervous. Although the ability to continue borrowing was approved by Congress, it is hoped that the down grade may be the catalyst for bi-partisan support for further spending cuts.

Economic data remains mixed, whilst the most recent employment data was positive the US consumer remains nervous despite strong corporate balance sheets and company earning data. Much of the focus over the next week will be on the outcomes of the Federal Reserve meeting at Jackson Hole, with markets hoping further stimulatory support will be announced.

In Australia there is continued demand for our exports and our relatively high interest rates means that the Reserve Bank has ability to lower interest rates should there be a requirement to stimulate the economy.

Who can I speak to about this?

Our Member Contact Centre is open Monday to Friday and we encourage you to call and ask to speak with one of our Member Education Consultants.  They can talk you through the current situation and any other super queries you may have.  Call the Member Contact Centre on 1300 650 161 if you wish to make an appointment or simply have a chat with one of our Member Education Consultants.

Is my defined benefit impacted by the share markets movements?

No.  If you are a member of the Revised Scheme, New Scheme, SERB Scheme, Transport Scheme or ESSS DB Fund then your retirement benefit is not impacted.

We're here to help

We will provide regular updates on our website when appropriate.  Otherwise, please call our Member Contact Centre on 1300 650 161 and ask to speak to a Member Education Consultant.

August 2011Get the latest news here