In light of the incursion of Russia into Ukraine, we provide a brief update on markets and reiterate our investment approach around current market volatility.

What is happening?

Russian troops have launched a wide-ranging attack on Ukraine. The current situation in Ukraine is highly uncertain and comes at great human cost.

  • Financial markets have reacted swiftly to the incursion, resulting in increased levels of market volatility around the world.
  • The incursion will have clear impacts on global oil, gas and commodity markets. There is potential for further disruption to gas supplies to Europe, with rising energy costs to lift global energy prices. 
  • For Australia, trade links to Russia and Ukraine are very small. But, like all countries, we will be impacted by the moves in international oil prices. 
  • From an economic standpoint, as the world emerges from pandemic lockdowns, further trade sanctions and greater geopolitical risk are negatives for the growth outlook. Rising oil prices will put further pressure on already elevated levels of inflation.
  • Overall, markets have been affected by multiple headwinds more recently: fears of rising interest rates, rising inflation and continuing supply-chain bottlenecks. The Russian incursion into Ukraine is likely to fuel further short-term volatility in the market.

While the near-term outlook is uncertain, the economic backdrop leading into this event was quite healthy.

What does this mean for your investments?

We made the decision to actively exit Russian investments in the early stages of the Russian invasion of Ukraine.

We had a very small exposure of 0.03% to Russian markets across the Fund to start with. Given the situation is highly uncertain and carries heightened investment risk, particularly in the short term, we have instructed the few external managers that held Russian investments on our behalf to exit these assets.

Since providing this instruction, we have been able to exit more than half of our original position. However, capital controls introduced by Russia on the 28th February 2022 mean we may not be able to exit the remainder in the near term.

The residual exposure to Russian securities is around 0.01% of the Fund’s assets. We will continue to monitor the remaining holdings as the situation evolves.

The situation remains highly uncertain, and we hope for a quick resolution. However, these events and rapid market reactions again emphasise the importance of a long-term perspective when considering superannuation and highlight the benefits of diversification, so your investments are not overly exposed to one particular market. We manage our investments to take account of short-term risks, but also by having an overarching and longer-term risk adjusted strategy that aims to maximise your retirement savings.

Managing your super through volatility

Aware Super is one of the largest super funds in Australia. We manage over $150 billion in retirement savings across a wide range of investments – including Australian and overseas shares, bonds and cash, property, infrastructure and private equity.

We are a top-performing fund with a track record of delivering strong long-term performance for our members. In the face of the challenges brought on by the COVID-19 pandemic, and now the incursion of Russia into Ukraine, you can feel confident that your retirement savings are safe, and that we remain focused on our primary aim – to help you achieve your best possible retirement.

Market swings can be concerning when it comes to your savings. Often, the best course of action is to remember your long-term goals and stick to your plans. The good news is that there are proven strategies for dealing with market ups and downs that can help you focus on what matters when there are some unsettling headlines in the news. 

Read more about market volatility to help you negotiate market ups and downs.

Have more questions?

If you want to find out more, talk to one of our financial planners who will assess your situation to determine if your strategy needs adjusting. This can be reassuring, especially if you are nearing retirement.