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Recent volatility in investment markets

Last Updated : 22 Aug 2011

Since 1 July2011, share markets have experienced significant volatility, triggered by investor concerns about the weakening short term economic outlook and level of debt in the US, and some of the European nations.

As more than half of the Balanced Option is invested in listed shares, our portfolio will reflect short term moves in share markets. However, these short term losses will be reduced by defensive and unlisted assets held in the portfolio that are not affected by short term fluctuations.

Understandably, these events make members anxious but you can be assured that AGEST is monitoring these developments closely.

It is important to remember that short term volatility in financial markets is usually reflective of changes in investor confidence rather than the long term outlook for global economic growth or the underlying value of particular assets.

AGEST invests for the longer term and has significant investments in developing economies outside of the US and Europe that continue to experience strong growth. The outlook for the Australian economy, which benefits from the growth in developing markets, is also positive especially asAustralia maintains very low government debt levels.

Members considering switching to more conservative options such as AGEST’s Cash Option should take advice before doing so. The risk of switching is that you effectively “sell” your interest in the share market when shares are cheap, locking in your short term loss. Consider – would you sell your house when house prices are low if you had the option of maintaining your investment and waiting for prices to recover?

Contact AGEST for free general advice about investment markets, or for a referral to our fee- for-service personal advice service (through IFFP Financial Planning) about what is right for you.