If you’ve been monitoring the global share markets recently you may have noticed a dip in recent weeks. As investors, it’s important to remember that market volatility is a natural part of investing as the market moves in cycles. Super is a long term investment so taking a long term approach can reap the most benefits.
The recent market volatility has been driven by concerns of US interest rates rises and slowing Chinese growth which have lowered investor confidence. In addition, trade wars and geopolitical risks have also spurred volatility in the share market.
It’s not all doom and gloom however, there’s good reason to remain cautious as global growth begins to slow. Whilst economic growth remains positive, the Fund is maintaining a reasonable amount of exposure to growth assets relative to lower returns available from cash and bonds.
How NGS Super has responded to recent market developments
Since the beginning of the year when we saw economic growth peak, the Fund has been reducing its exposure to share markets and seeking out alternatives that have more bond-like characteristics and are less dependent on share market performance. The repositioning of the portfolio reflects the Fund’s medium term forecasts of lower share market returns and is aimed to safeguard members’ savings in the event of further deterioration in economic growth.
The Fund remains cautious on the outlook for share market returns and expects volatility to continue. We are continuing to deploy capital to attractive private debt and equity opportunities. In addition, we are holding more cash in our multi-asset class options and are looking to increase our infrastructure exposure at the expense of property.
Investment cycles come and go and often more money is lost by cautious investors preparing for a market downturn than the market downturn itself. As a long-term investor, the Fund continues to seek out investment opportunities that will build wealth over the long term. Diversification remains one of the best strategies for safeguarding the portfolio against various market conditions and this is a fundamental investment belief that the Fund holds. This enables the Fund to take a long-term approach to investing and building wealth for members.