How to stay calm in volatile markets – think like a super fund

The current news cycle is overwhelming, particularly for investors. Every time the potential for peace talks rises, so does the S&P 500. And when tensions escalate, markets tend to fall just as quickly.

The AI-trade has seen some recovery, propelled by high sales forecasts from Intel, Google’s $10bn investment in Anthropic (with more to follow) and upcoming reporting this week from Amazon, Alphabet, Microsoft and Meta.

Closer to home, inflation continues to rise and place pressure on the economy with rate hikes expected not just in the May RBA meeting but across the year.

It’s hard to predict the market at this point in time, and while investors are often reminded to think of the longer term and their strategy, perhaps none of us are thinking long-term enough.

Perhaps it’s time to take a lesson from super funds which are investing for the marathon, not the sprint. It’s a 20-30 year time horizon for portfolio managers of super funds, not just a few years. While current market activity does play into their approach in the form of tactical tilts and opportunities, it doesn’t significantly change the strategy and they still operate within specific asset allocation ranges. 

A long strategy doesn’t mean no pressure to perform though. Super funds still need to target above market-levels of growth while protecting capital to ensure their clients’ future retirement lifestyles and wellbeing. The short-term still matters, but an eye to the ultra-long term can change how you view volatility – as an opportunity for growth rather than a threat.

I recently wrote about the top 10 MySuper funds, and Aware Super was one of the top performers for its MySuper Lifecyle 55 and under fund. David Goodman, Portfolio Manager for Investment Strategy for Aware Super shared how he is managing portfolios in the current environment.

Investors might take heart from his positive approach to the current market: “Volatility isn’t an obstacle to long-term returns – it’s part of the journey towards them.”

The current economic backdrop

“The backdrop is genuinely challenging. The outlook for global growth has weakened, as current geopolitical tensions and high energy prices are generating real headwinds, combined with RBA tightening measures.

But in saying that, one thing we’re reminded of is how quickly market sentiment can shift on a single headline.

So, as long-term investors, while we’re watchful, we’re also actively looking for opportunities to add risk when they arise,” says Goodman.

Aware Super isn’t making big shifts in the portfolio but Goodman notes the team are actively reviewing and stress-testing, as well as holding liquidity buffers for opportunities from volatility.

“When volatility is managed well, it can work in our members’ favour,” he says.

Superannuation funds set ranges for asset classes and can move within these ranges to take advantage of market conditions or add tactical views to a portfolio.

For example, Aware Super’s MySuper Lifecycle 55 and under fund uses the following ranges – current target allocations are shown below (based on 31 December 2025 reports).

Source: Aware Super

Across the last quarter of 2025, there were slight shifts in the target allocations compared to the previous quarter. This reflects returns and growth in international shares, along with opportunities from rising rates to add to fixed income allocations.

Opportunities from the current market

Goodman notes that Aware Super currently has a small overweight to equities.

“Our managers are currently finding better value in Europe so we’re modestly overweight there. We’re also seeing attractive opportunities in European real assets which fits well with some of the longer-term themes we’re backing,” he says.

In the wake of AI concerns this year, Goodman highlights that the Magnificent Seven has been a source of strong returns for Aware Super’s clients and makes up around a quarter of the international equities portion of the portfolio.

“These are exceptional businesses but as any responsible long-term investor, we have to be clear-eyed about concentration risk so we manage that by staying well-diversified across sectors, regions and asset types. Our teams are also finding AI related opportunity in private markets too – it’s not just a listed equities story for us,” he says.

Many super funds have increased allocations to alternatives like private equity and private credit in the last decade. Aware Super is no exception to this and holds a 7.4% allocation to private equity.

“Private equity gives us exposure to some of the most exciting and innovative ideas and investment opportunities that aren’t available on listed markets,” Goodman says, highlighting that these strategies are higher risk but offer the potential for higher returns.

The team uses proven managers, but will back emerging managers where they see the right opportunity. Aware Super uses co-investments as part of their approach “to sharpen our exposures and manage fees at the same time.”

Turning to private credit, which has garnered a lot of media attention, Goodman explains that the team maintains a well-diversified portfolio and both external managers as well as Aware Super’s own direct lending program for control over quality and terms. The team isn’t looking to make big shifts in the strategy at present but highlights it is critical to be active and dynamic in allocations across sectors and managers.

The portfolio currently has a target allocation of 11.1% to infrastructure and Goodman notes it offers protection and stability, particularly in periods of market volatility. An added benefit is the positive links between inflation and infrastructure.

In this space, Aware Super is focusing on long-term macro trends, including the energy transition, demographics and digitisation, which will persist regardless of market cycles.

Acting for the long-term

Superannuation has the advantage of decades of compounding and growth, so Goodman suggests investors get engaged and “don’t be too spooked by short-term volatility”. It can be a growth opportunity in his view.

As he says, “members who understand this and stay the course are the ones who will benefit over time and find security in their retirement.”

It’s equally a lesson for investors outside of superannuation to focus on their investment strategy, rather than making snap decisions and ensure it continues to reflect their needs, goals and situations. Assess investments within that framework, as if you were a super fund manager.

It’s also worth recapping Goodman’s statement that the team aren’t looking to make big changes in the Aware Super strategies, but rather take advantage of small tactical opportunities as needed. 

Market volatility is not typically the time for dramatic changes. If your investments are high quality and suit your strategy, then they should continue to support your strategy down the track as volatility eases.

Volatility is not necessarily bad news, even though it can unsettle even the hardiest of investors. Stay the course. Watch for the right opportunities. Seek advice if needed.