1. What's been driving the market fluctuations?
First of all, let me re-iterate that market volatility is a normal part of investing.
We expect market ups and downs as par for the course, and our long-term investment approach takes this into account.
That said, the market volatility in 2022 has been driven by a complex mix of factors.
After a long period of low inflation and low interest rates, inflation pressures returned in 2022 and caught Central Banks a bit unprepared. After initially believing inflation would pass, they found themselves needing to raise rates rapidly and this had flow on impacts to shares and bonds. We can usually rely on bonds to diversify share investments, but this year they both fell at the same time, which is quite unusual. Adding to the volatility was the war in Ukraine, China’s ongoing struggles to contain COVID and lingering supply chain issues from the pandemic.
Super funds, like Aware Super, have not been immune from this, although our diversified portfolios benefited from investments in assets like property, infrastructure, and alternative strategies, which have proved very defensive in this climate.
As investors, we often find that market falls can create investment opportunities. Our large investment team of over 100 experienced professionals are ready to invest as, and when, good quality opportunities become available at low prices.
Our focus remains dedicated to delivering long-term returns for our members’ retirement outcomes. This allows us to look through market volatility and economic cycles, like what we are seeing at the moment, to deliver you strong long-term returns.