“Equities suffered so badly last year, but … bonds suffered more. It’s the meeting of the two that caused the chaos,” he said. “We know markets always recover, the question is how long it will take.”
On Thursday, ANZ’s global market outlook forecasted a challenging time for investors this year as markets will remain under pressure. Stocks are likely to struggle as earnings start to reflect a recessionary environment, demand weakens and margins falter, said Lakshman Anantakrishnan, head of investment strategy at ANZ Private Bank.
“2023 will have a hard time surpassing the challenges that financial markets faced in 2022, but this year will likely not be a smooth ride for investors,” he said. “While the macroeconomic outlook will remain challenging, unlike 2022, there should be ample opportunity for investors this year – where and when remains the question.”
Linda Elkins, head of asset and wealth management at KPMG, said the top three challenges superfunds have grappled with over the past year have been rising interest rates, rising inflation and the uncertainty this has caused in Europe.
“I think it would be fair to say that the uncertainty continues this year with the same factors,” she said.
“But I think looking at those long-term returns is the real key to understanding how well superfunds in general – certainly the quality funds – have managed the investment markets.”
She said a long-term perspective is crucial despite the bumps predicted over the next 12 months. Retirees who have shifted their investments into higher-growth options or stocks to replace the returns they lost to low interest rates will find these markets bumpy, she said.
“Responding to lower returns may mean simply taking on more risk. Of course, that can be great or not great.”
Elkins said those concerned about last year’s negative returns and the economic outlook should first consider whether they are in a MySuper fund, the standard products, or a select fund, where members have more control and flexibility. They should then make sure they are in a well-performing fund and also consider seeking professional advice to help them make their decisions.
Chant West’s Mohankumar said when investment markets plummeted, some people tended to panic and consider moving their money into less risky investment options or into cash.
“We caution members about the dangers of trying to time the market,” he said.
“In most cases, this will result in a worse outcome in the long run than staying the course. Panic only converts paper losses into real ones. Furthermore, you risk missing out on a market recovery – which it eventually will.”
https://www.smh.com.au/business/banking-and-finance/will-your-super-fund-recover-this-year-20230118-p5cded.html?ref=rss&utm_medium=rss&utm_source=rss_business Will Your Super Fund Recover This Year?