The value of downside protection
ESSSuper - 27 Mar 2020
Daniel Selioutine, Head of Investments, takes the opportunity to highlight the benefits of ESSSuper downside protection.
The value of downside protection, pays off when you need it most
When it comes to investing your super, partnering with ESSSuper can help you chart a steady course to reach your financial destination.
We stick to a designated and reliable investment model that achieves competitive returns in growing markets, and, crucially, aims to better protect members in contracting markets.
ESSSuper's considered investment approach seeks to protect your investment against significant falls in the market
Since inception of the Accumulation Plan in 1997, downside protection has been a key investment principle guiding the fund’s investment approach. Downside protection means that our Investment Options are designed to meet their return objectives with less return volatility, helping to protect your superannuation balance when investment markets inevitably decline.
Historically this has meant that our Investment Options have been some of the better performing Options during market downturns when measured against industry peers.
Importantly, while our downside protection is likely to reduce your investment losses during the current Coronavirus related market volatility, it will not fully insulate your superannuation balance from losses. This is because downside protection must be balanced against investing in sufficient growth assets to achieve your Option’s return objective.
Achieving the return objective is crucial to ensuring you have sufficient superannuation when you retire
It is important to remember that superannuation is a long-term investment. Our investment objectives are set on the basis that a member will be invested through the market cycle, including its peaks and troughs.
Investment markets are currently in a trough or a down market
Switching Investment Options to lower risk Options may inadvertently lock-in investment losses and miss out on the potential for higher returns by being out of the market when it recovers. Over the longer term, our Investment Options have met their return objectives, helping our members to retire early or enjoy their retirement in the best financial position possible.
Our 3 core philosophies:
- Maintain the course
Investments that over-perform quickly can spin out of control – even crash. We make choices that aspire to provide steady traction during the investment journey and aim to help members achieve a financially secure life in retirement.
- Keep to the Strategic foundation
We make calculated and informed decisions, weighing up the risks and opportunities that target solid growth and maximum strength.
- Provide Absolute value
Every expense is thoroughly considered with all investments efficiently managed. That's how we intend to keep precious dollars going back into your balance.
What we’re doing amidst COVID-19
In the event of economic events such as the COVID-19, plans have been in place to reduce market volatility and vulnerability.
We prefer to invest in assets that endeavour to provide the stability to generate long term results. This means the majority of your investment is likely to have a more stable foundation within tangible, real world assets.
We're here to help
Our aim is to help every member achieve a comfortable and financially secure life in retirement through investment options that meet their retirement objectives over the long-term. We have a range of foundational principles that we adhere to when it comes to making these decisions. To learn more about how our investment approach works, click here.
Before you make any change to your super investment strategy, we encourage you to speak to an ESSSuper financial adviser, to book an appointment please call us on 1300 650 161 or email us at info@esssuper.com.au