Don’t panic! Superannuation fund members warned against rash changes to investment mix as war smashed markets

Millions of Australians have watched in horror over the past month as the escalating conflict in the Middle East erodes their superannuation savings.

Almost $300 billion has been wiped off the S&P/ASX200 since the index reached an all-time high of 9200.2 points just three weeks ago, diving 8 per cent.

Investors continued to bolt on Monday after US President Donald Trump stepped up his rhetoric against an Iranian regime that has meet threats of further military action with its own warnings about access to the Strait of Hormuz and the flow of oil through a vital global gateway.

But superannuation fund members have been urged to look through the chaos and refrain from snap investment decisions in a rush to safety that could rob them of the benefits of a market rebound.

Chant West head of superannuation investment research Mano Mohankumar said members needed to view such short-term movements in the market and the value of their fund in context.

“It’s critical for members to keep in mind that super is a long-term investment and there will inevitably be periods of market weakness through their super journey,” Mr Mohankumar said.

“While we recognise that members have different levels of comfort when their balance goes backwards, the majority can afford to remain patient, including many older members.”

Fund members have long been told to expect multiple periods of volatility throughout their working lives but to see superannuation as a long runway, where times of market chaos are followed by rebounds which, over decades, grow their cash pile.

Mr Mohankumar said those closer to retirement and watching their balances fall should also think twice before hitting the panic button.

“A lot of Australians don’t take out all of their super as a lump sum at retirement, meaning a substantial amount is likely to remain within the super system in the pension phase, often for many years,” he said.

“In reality, their investment horizon is longer than they might think.”

Data released by Chant West on Monday showed Australia’s super funds delivered positive returns in February as the S&P/ASX200 hit multiple closing highs, with the median growth fund — between 61 and 80 per cent invested in growth assets — adding 1.1 per cent for the month. All growth funds did marginally better, gaining 1.4 per cent.

But the start of the conflict in the Middle East and fears of runaway inflation and rising interest rates back home more than erased those gains as the market tumbled close to correction territory, driving the median growth fund down 3.8 per cent so far in March.

Chant West said the decline has pulled gains for the financial year back to 2.5 per cent.

But Mr Mohankumar said members should remember that funds delivered strong results in each of the previous three financial years — 9.2 per cent in 2022/23, 9.1 per cent in 2023/24 and 10.4 per cent in 2024/25.

Those high returns should not be expected very year, he said, and now was not the time to make rash investment decisions.

“When markets fall sharply, some people consider moving to lower-risk options or cash, with a view to moving back later, generally out of fear or as an attempt to time the market,” he said.

“Far more often than not, that approach results in poorer long-term outcomes than if they stay the course.

“Not only do they crystalise their losses, but also risk missing part or all of the subsequent market rebound. We would encourage those members who are thinking of switching options to see a financial adviser.”

His comments were backed up by AMP chief economist Shane Oliver, who in a note on Friday said the “noise” of the conflict was adding to investor uncertainty.

He also noted the typical playout was for a sharp market fall, initially averaging about 8 per cent, but then a recovery over the next 12 months averaging about 14 per cent.

“Of course, each shock is different with wide ranges around these averages. And more fundamentally given the uncertainty now is a critical time to stick to basic principles of investing,” Dr Oliver said.

Chant West’s data showed that at the end of February, all growth funds had delivered returns of 8.9 per cent since July 2025, high growth funds 7.4 per cent, growth funds 6.5 per cent, balance funds 5.3 per cent and conservative funds 4 per cent.