As COVID-19 continues to affect financial markets, we anticipate that some State Super members may be concerned about their investments. After the healthy returns experienced to date, we are now seeing a large market correction. The COVID-19 outbreak is expected to have an adverse impact on global economic growth.
While experience from previous pandemics suggests that worst case scenarios will often not eventuate and that there is strong recovery within a relatively short period after the outbreak, it is still too early to know how large and how long the COVID-19 outbreak may be. There is clearly a short-term impact due to strong containment actions that are restricting physical movement and consumption.
We are carefully monitoring and assessing the risk that the drop in economic activity and confidence triggered by COVID-19 has a long-term impact on the global economy and managing the portfolio accordingly.
The assets in the fund are managed in accordance with State Supers investment policies and risk management framework. We have built defensive mechanisms into our portfolios that are providing a degree of protection for the portfolios to help weather the storm.
Focus on fundamentals
Global growth expectations for 2020 are now marked down from prior estimates due to COVID-19 and the prevailing low-interest, low-inflation environment sees no signs of being disrupted. Continuing fiscal stimulus and possible quantitative easing programs will be required to support the economy and market expectations.
On the whole, markets may benefit from ongoing support from monetary and fiscal policy, although there may be increased short-term volatility. This by no means flags any sense of complacency with regard to our active management of fund risks, which remains a key pillar in our strategy.
The most important thing is to have a sound, long-term investment plan that will help you achieve your retirement goals. However, we appreciate the impact of events like these can be unsettling, and that everyone’s situation is different.
If your situation has changed or you’re feeling uneasy, you may want to get financial advice. As a State Super member, you and your family can access a range of services from over-the-phone advice to face-to-face meetings with a professional financial planner at StatePlus.