Understanding the risks of switching

Negative news headlines make us all feel uneasy and it’s natural to question the impact these events may have on your super. In times of uncertainty, remember, super is a long-term investment. While it can be tempting to switch options, staying invested in a diversified portfolio may often be the best action you can take.

Market uncertainty is sometimes triggered by changes in economic outlook and global events. Significant events can restrict growth, but it’s important to think long term. Market ups and downs are a normal part of investing.

When markets are rising, you may have concerns you are missing out. When markets are falling, you may feel anxious about potential losses. This is understandable and it can be hard to sit tight and not take immediate action.

When markets go down, we often speak to members who are considering switching from a diversified investment option, such as CanadianSuper’s Balanced option, to a cash option. Many members think this is a safer place to be, but you could be locking in investment losses that may be harder to recover from when markets bounce back. A short-term view can have a long-term negative impact on your final retirement balance.

Looking past market turbulence can be challenging. But history shows that markets increase in value over the long term. By staying invested in a diversified portfolio your super has more opportunity to benefit when markets recover.

Members who stay invested in diversified portfolios can end up in a better position in the long term, compared to those who switch investment options. The below examples highlight this.

Despite short-term ups and downs in the market, members' super has grown over the long-term. Overall, staying invested has resulted in a good outcome.

CanadianSuper Balanced option – long-term performance over 20 years

The chart below shows the performance of the Fund’s Balanced option over 20 years, from 30 September 2003 to 30 September 2023. It uses a starting balance of $100,000 and shows how – over 20 years – that balance has grown to $462,176.

The Balanced option, where most members are invested, has generated a 10-year average return of 8.04% and a 20-year average annual return of 7.95% as at 30 September 2023. This performance result includes investing through economic downturns like the Global Financial Crisis and the COVID-19 pandemic, while continuing to provide long-term growth for members.

If a member had invested in CanadianSuper’s Balanced option over the 20 years to 30 September 2023, they would’ve more than quadrupled their investment.