‘Be alert, not alarmed’: Aussie superannuation funds battered by US stock market turmoil
Herald Sun, 12 March 2025
“The key message is be alert, don’t be alarmed,” said Kirby Rappell, executive director of SuperRatings.
Data released by superannuation research house on Monday showed monthly returns turned negative for the month of February, the second monthly negative return for the financial year.
Despite the Reserve Bank cutting the cash rate for the first time since November 2020, Australian and international share markets — key drivers of super fund returns — declined in February as Mr Trump’s tariff agenda came into focus.
“The impact of tariffs on China and potential flow-on effects to the Australian economy in particular influenced Australian share expectations, offsetting any potential benefit from the reduction in interest rates,” SuperRatings said.
SuperRatings estimates that the median balanced option fell by 0.8 per cent in February, while the median growth option fell by 1.2 per cent. The median capital stable option delivered a small but positive 0.1 per cent return.
Pension returns tracked accumulation return trends. The median balanced pension option fell by an estimated 0.9 per cent, the median growth pension option by 1.4 per cent, while the median capital stable pension option was up 0.1 per cent.
While returns fell in February, funds have delivered a roughly 7 per cent return so far this financial year, and Mr Rappell said provided they can “navigate the next few months well”, members are on track for a positive full-year outcome.
With March off to a rocky start and warnings of worse to come, Aussies should brace themselves but learn to “drown out the noise”, according to Mr Rappell.
“I think this is probably the first time we’ve seen volatility re-emerge for a while and so no doubt people will be noticing that,” he said.
“The level of ups and downs we’ve been seeing for a while has actually been very low, so this is probably going to back to the longer-term trend where we do see a bit of movement. It gets back to where people’s focus needs to be in superannuation — don’t focus on the day-to-day, month-to-month but get long-term settings right and drown out the noise.”
Nearly half of Australia’s $4.2 trillion superannuation pool is invested in international assets, with the US stock market making up a significant chunk.
Mr Rappell said exposure to Wall Street turmoil was unavoidable.
“Increasingly as super funds get bigger we are exposed to more international markets, there’s really no way to avoid it,” he said.
“It’s actually really important to the long-term objectives of super that people are exposed to international markets. The US is a huge market, it’s very hard to avoid and you probably wouldn’t want to.”He added the key would be how funds managed US exposure.
“It’s up to each fund to stay ahead of the trends — who could benefit potentially and who’s probably a little more exposed,” he said. “It comes back to that long-term thinking. But typically if there’s no exposure to the US you’d be seeing a worse outcome.”
