The US election – what will it mean for investment markets?

Much of the investment market had priced in a Hillary Clinton led Democratic Party win in the US and are now in the process of adjusting in the short term. This means that short term volatility is likely to continue as markets now process how a Trump presidency and a Republican Party controlled Congress may govern. This type of situation is similar to what markets experienced with the Brexit vote in June this year where the market experienced some volatility immediately after the vote and stabilised thereafter.

What many agreed on is that, like Brexit, we will experience some short volatility in markets. Whilst it is difficult to assess the longer term impact until policy decisions are clearer, investment markets are also influenced by factors other than the presidential policies such as central bank policies, commodity prices and currency movements to name a few. Growth in the US economy which is Trump’s (pro-business) focus may well be beneficial for investment markets over time.

Superannuation is a long term investment for the majority of people and equity markets provide the opportunity for considerable growth in the long term but with that comes short term volatility.

If you are concerned about your current investment strategy, we encourage you to have a conversation with one of our financial planners so they can help you identify a strategy that you’re comfortable with, that suits your time horizon and appetite for risk

You can book a time to speak with a financial planner over the phone or by calling 1300 366 216.

How are investment markets likely to react?

Markets react very quickly to bad news and uncertainty. They also tend to over-react on negative sentiment.

Interestingly, after the Brexit announcement the market stabilised after a period of short term volatility – investment markets may well follow the same path with Donald Trump’s election victory, however it remains to be seen. In the short term if the US Federal Reserve elects not to increase interest rates, this may be viewed as a positive outcome by equity markets.

Markets will be keeping a close eye on Trump’s domestic and international policy decisions, his focus on growing the US economy and whether he modifies his more extreme rhetoric on global relations. It should also be remembered that any policy changes also need to be passed through Congress and it is still unclear in spite of a Republican Party congressional victory that Trump has the full support of the Party for some of his (extreme) proposals.

What are the consequences for VicSuper investments?

Any short term market volatility will impact more immediate returns for any VicSuper investment options, particularly those options that have exposure to growth assets such as equities.

However VicSuper has a robust investment strategy in place to manage market volatility. And we’re confident that, in the longer term the asset allocation of these investment options will continue to drive returns for members, albeit in what we expect to be a lower growth and lower return environment.

From a strategic perspective, at VicSuper we have been reducing our equities exposure for some time and will continue to reduce exposure to equities in favour of real assets (such as property and infrastructure) and our alternative assets.

VicSuper along with its investment consultants and investment managers will continue to research potential investment opportunities that may arise as a result of market volatility following the Trump announcement.

I’m concerned – what should I do?

It’s natural to be concerned in times of uncertainty. In times of economic change following a significant event, taking a ‘knee jerk’ reaction is not in investors’ best interests. Selling assets when markets are low and buying back in when markets rebound may not be as beneficial as holding your course through the market volatility. We can help. If you’d like to review your investment options or want to discuss anything about your super, take advantage of our available advice service. You can book a conversation or call 1300 366 216.

The information in this document is of a general nature only and does not take into account your objectives, financial situation or needs. You should consider the appropriateness of the information and read the relevant VicSuper Product Disclosure Statement before making a decision on whether to join VicSuper. You may wish to seek professional advice for your own circumstances before you take any action and can contact VicSuper to make an appointment to see one of our superannuation advisers. VicSuper Pty Ltd ABN 69 087 619 412 AFSL 237333 is the Trustee of VicSuper Fund ABN 85 977 964 496

Much of the investment market had priced in a Hillary Clinton led Democratic Party win in the US and are now in the process of adjusting in the short term. This means that short term volatility is likely to continue as markets now process how a Trump presidency and a Republican Party controlled Congress may govern. This type of situation is similar to what markets experienced with the Brexit vote in June this year where the market experienced some volatility immediately after the vote and stabilised thereafter.

What many agreed on is that, like Brexit, we will experience some short volatility in markets. Whilst it is difficult to assess the longer term impact until policy decisions are clearer, investment markets are also influenced by factors other than the presidential policies such as central bank policies, commodity prices and currency movements to name a few. Growth in the US economy which is Trump’s (pro-business) focus may well be beneficial for investment markets over time.

Superannuation is a long term investment for the majority of people and equity markets provide the opportunity for considerable growth in the long term but with that comes short term volatility.

If you are concerned about your current investment strategy, we encourage you to have a conversation with one of our financial planners so they can help you identify a strategy that you’re comfortable with, that suits your time horizon and appetite for risk

You can book a time to speak with a financial planner over the phone or by calling 1300 366 216.

How are investment markets likely to react?

Markets react very quickly to bad news and uncertainty. They also tend to over-react on negative sentiment.

Interestingly, after the Brexit announcement the market stabilised after a period of short term volatility – investment markets may well follow the same path with Donald Trump’s election victory, however it remains to be seen. In the short term if the US Federal Reserve elects not to increase interest rates, this may be viewed as a positive outcome by equity markets.

Markets will be keeping a close eye on Trump’s domestic and international policy decisions, his focus on growing the US economy and whether he modifies his more extreme rhetoric on global relations. It should also be remembered that any policy changes also need to be passed through Congress and it is still unclear in spite of a Republican Party congressional victory that Trump has the full support of the Party for some of his (extreme) proposals.

What are the consequences for VicSuper investments?

Any short term market volatility will impact more immediate returns for any VicSuper investment options, particularly those options that have exposure to growth assets such as equities.

However VicSuper has a robust investment strategy in place to manage market volatility. And we’re confident that, in the longer term the asset allocation of these investment options will continue to drive returns for members, albeit in what we expect to be a lower growth and lower return environment.

From a strategic perspective, at VicSuper we have been reducing our equities exposure for some time and will continue to reduce exposure to equities in favour of real assets (such as property and infrastructure) and our alternative assets.

VicSuper along with its investment consultants and investment managers will continue to research potential investment opportunities that may arise as a result of market volatility following the Trump announcement.

I’m concerned – what should I do?

It’s natural to be concerned in times of uncertainty. In times of economic change following a significant event, taking a ‘knee jerk’ reaction is not in investors’ best interests. Selling assets when markets are low and buying back in when markets rebound may not be as beneficial as holding your course through the market volatility. We can help. If you’d like to review your investment options or want to discuss anything about your super, take advantage of our available advice service. You can book a conversation or call 1300 366 216.

The information in this document is of a general nature only and does not take into account your objectives, financial situation or needs. You should consider the appropriateness of the information and read the relevant VicSuper Product Disclosure Statement before making a decision on whether to join VicSuper. You may wish to seek professional advice for your own circumstances before you take any action and can contact VicSuper to make an appointment to see one of our superannuation advisers. VicSuper Pty Ltd ABN 69 087 619 412 AFSL 237333 is the Trustee of VicSuper Fund ABN 85 977 964 496