Investment risks

The significant risks that any investor could encounter include:

Credit risk

The risk that a debt issuer will default on payments of interest or principal.

Currency risk

The risk that overseas investments gain or lose value as a result of a falling or rising Australian dollar.

Derivatives risk

The risk that exposure to exchange-traded and over-the-counter derivative instruments increases the risk in a portfolio or exposes a portfolio to additional risks – such as the possibility that a position is difficult or costly to reverse or that there is an adverse movement in the asset, interest rate, exchange rate or index underlying the derivative. For information on the use of derivatives, see our Investing in derivatives fact sheet.

Individual asset risk

The risk attributable to individual assets within a particular asset class. Individual assets in which Media Super invests can (and do) rise or fall in value for many reasons, such as changes in the internal operations or management of a fund or entity in which Media Super invests, or the business environment in which it operates.

Inflation risk

The risk that money may not maintain its purchasing power, due to increases in the price of goods and services (inflation).

Interest rate risk

Changes in interest rates can have a positive or negative impact, directly or indirectly, on investment value or returns – for example, the income return on a fixed-interest security can become more or less favourable when rates change. Interest rate risk also refers to fluctuations in the cost of borrowing.

Investment Manager risk

The risk that a particular investment manager will underperform. For example, this could be because their view on markets is wrong, or because of their investment ‘style’, or because they lose key investment personnel.

Liquidity risk

The risk that investors will be unable to redeem their investment at their chosen time.

Market risk

The risk of major movements within a particular asset class.

Negative returns

There is a risk that investment options will have negative returns, causing you to lose principal capital and earnings.

Policy risk

Changes are frequently made to superannuation law, and may also occur to the taxation of superannuation, which may affect the value of your investment or your ability to access your benefit.

Political risk

The risk that domestic and international political events can impact on an investment.

Taxation risk

The risk that taxation laws and their interpretation may change in the future in a manner that may adversely impact the taxation outcomes for members.

Timing risk

The risk that, at the date of investment, money is invested at higher market prices than those available soon thereafter. Alternatively, it can also mean the risk that, at the date of withdrawal, investments are redeemed at lower market prices than those that were recently available or that may have been available soon thereafter.

Volatility risk

Is the instability of a particular investment.

 

Before making an investment choice we strongly recommend that you consider the risks outlined here. You should consider diversification and all the risks associated with investments before making an investment choice.