Understanding market volatility
2025 | 5min read
Market volatility, or market ups and downs, is a normal part of investing. Learn about why markets rise and fall over time and what it means for your super.
What is market volatility?
Market volatility means the ups and downs in markets which happen in response to changes in the value of investments, like shares or property.
Volatility happens as investors react to different pieces of news or events and try to interpret whether they’re positive or negative for the value of their investments. Your super is an investment, so its value can also go up and down as markets move.
Help and guidance when markets are volatile
You can’t avoid market volatility, but we can help you stay on top of what’s going on and what it means for your super.
You ask. We answer. Here’s the often-asked questions.
Market ups and downs can be unsettling, so we’ve put together some clear-cut answers to help you feel more confident during market volatility.
Market volatility means the ups and downs in markets as assets change price. When asset prices change it can change the value of your investments, including your investments in super.
Market volatility happens as investors react to different pieces of news and try to assess how the new information might affect returns from their investments.
It’s a normal part of investing and happens in response to many different things including economic data, political announcements and geopolitical events.
When markets are moving up and down we always encourage members to stay calm and not react immediately. Often the best course of action is to stay invested and stay focused on your long-term plan. History tells us that markets generally recover and rise again over time.
Short-term market volatility like this is a normal and expected part of investing and happens in response to many different things. Over the period your super is invested, it’s likely you will invest through strong markets as well as more difficult periods and even recessions.
Periods of market volatility are not unusual - the Global Financial Crisis and the COVID-19 pandemic are two examples of periods when significant market volatility was followed by a recovery in markets.
While no one can predict the future, history shows us that market activity like this is not unusual, it happens regularly, and markets generally settle down and recover.
Often the best course of action is to focus on your long-term goals and stick to your long-term strategy. If you switch after a market fall you risk locking in losses and not benefitting when markets rise again. Short-term volatility typically has little impact on long-term returns, but switching can have a negative effect on your balance over the longer term.
You can see in the following graphs the effect on members’ balances of switching to cash following the Covid-19 market falls.
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Source: Aware Super. The chart shows $100,000 invested in the Aware Super Future Saver High Growth option on 31st January 2020 and the different unit price investment return series; comparing staying invested in High Growth with switching to the Cash option on 31st March 2020. Past performance is not a reliable indicator of future returns. See our website for Investment Performance of our investment options.
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Source: Aware Super. The chart shows $100,000 invested in the Aware Super Retirement Income Conservative Balanced option on 31st January 2020 and the different unit price investment return series; comparing staying invested in Conservative Balanced with switching to the Cash option on 31st March 2020. Past performance is not a reliable indicator of future returns. See our website for Investment Performance of our investment options.
You can be confident that your super is in expert hands at Aware. Our specialist investment team is experienced at managing your investments in all market conditions and through different market events.
Our long-term focus and diversified portfolio are designed to ride out periods of short-term volatility and to grow your savings over the long term.
If you’re one of our younger members, remember that you have a long-term investment horizon, so don’t need to worry so much about short term dips. It’s likely you’ll be investing through periods of strong growth as well more difficult periods and have time on your side to build your savings.
If you are nearing retirement, remember you will also likely have a long-term horizon. If you’re invested in our default Lifecycle option, which is where most of our members are invested, our approach means your super is less exposed to share market risk over time, which can help reduce the impact of volatility.
If you’re retired, we understand that you are funding your lifestyle from your super balance – so safeguarding what you have is very important. If you’re invested in one of the options typically chosen by retirees, we build in more defensive assets to help cushion your balance from extreme market falls – to help give you confidence that your money will last for longer in retirement.
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For more information, please visit our Learn Hub for education and resources or contact us directly on 1300 650 873.
