Investment update – Middle East conflict

As events continue to escalate in the Middle East we are seeing global markets, including here in Australia, experience periods of heightened volatility as investors become increasingly concerned around the ramifications of a prolonged conflict in the region. We understand that this can create uncertainty for our members, so we want to provide an update on what is happening and how your super is positioned to navigate this period.

Because energy is a foundational input to every sector of the global economy, from manufacturing to transport, technology, agriculture and logistics, any sustained disruption has immediate effects on inflation, costs of production, and consumer spending, all of which directly feed into market sentiment.

As a result, oil prices have risen sharply, moving as high as nearly $120 a barrel before moving sharply lower over recent days on the back of comments from President Trump that the war will be over “very soon”. Note that this is the first time that oil has gone above $100 a barrel since July 2022, when investors were reacting to the aftermath of Russia’s invasion of Ukraine.

While this is a serious geopolitical event with real economic implications, it is important for members to understand that short-term volatility in markets is normal and is to be expected. This episode, and like many before it, reinforces why diversification matters.

It is why we focus on designing an investment strategy that is centered around resilience and has the ability to navigate through whatever comes next and deliver a consistent pattern of returns in both rising and falling markets.

Markets will always have shocks such as geopolitical events, inflation spikes and recessions. Resilience means building a portfolio that isn’t overly reliant on one outcome and contains assets that behave differently in different environments. That way, when one part of the portfolio is under pressure, others help stabilise the overall result.

Our strong long-term track record illustrates this, with our Balanced Growth Option delivering 8.18% p.a. over 15 years (to end December 2025), well above our long-term objective of CPI+3% p.a. It does demonstrate the benefit of remaining focused on long-term results rather than short- term noise. We will of course continue to monitor developments closely and adjust our portfolios were appropriate.

While the situation in the Middle East is serious and has resulted in significant volatility in global markets, we do recognise this can be an uncertain time for our members. At times like this, it’s important to avoid reacting to the headlines and to remember that it is time in markets, not timing markets, that delivers over the long-term. 

Our message to members remains the same, short-term volatility in markets is normal and it is important not to react to headlines and noise. We will continue to monitor events closely and provide updates as the situation evolves, it is still extremely fluid right now and this is likely to persist for the immediate future.