Superannuation funds have suffered their worst monthly losses in more than three years as the Iran war triggers volatility in financial markets. It’s sparked a surge in Aussies switching their investments to cash, but experts are warning it can be a dangerous move.
Fresh data from SuperRatings estimates the median balanced option dropped by 3.2 per cent in March, wiping out gains accumulated since September 2025. The median growth option is estimated to have fallen by 4.1 per cent, while the capital stable option also recorded an estimated loss of 1.8 per cent over the period.
Separate data from Chant West also found that a broad sample of investment options posted an average loss of 3.2 per cent in March, which marked the worst return since September 2022.
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SuperRatings director Kirby Rappell said the pathway for funds to outperform the long-term average this financial year was narrowing, as returns confront elevated levels of uncertainty across global and domestic markets.
“Markets are responding quickly to a rapidly evolving situation. This means we are likely in a period of greater volatility,” he said.
“While this will flow through to balances, it should be remembered that [a] member’s super is usually invested across a range of asset classes (not just shares) and that over the long term, super returns remain sound.”
For the financial year to date, the return for the average balanced option has eased to 2.8 per cent. Annually, the return is 7.8 per cent.
Over five years, the median return is 6.6 per cent, and over 10 years it is 7.4 per cent.
Ongoing volatility has prompted some Aussies to switch their investment strategies to more defensive options.
AustralianSuper has seen members switching their super into cash at around four times the usual rate over the past month, with 500 members a day switching to cash.
HESTA has also noticed an increase in switching activity, prompting the super fund to urge members to “stay the course” with their investment strategy amid market volatility.
“While it’s important to stay informed, knee-jerk reactions to short-term market movements can crystallise losses and risk missing out on a market bounce back,” HESTA CEO Debby Blakey said.
“This could potentially cost tens of thousands of dollars at retirement.”
The super fund found that a member who moved $100,000 from a balanced option to a cash option during COVID in 2020 would be more than $20,000 worse off just five years later. That assumes they took one year to switch back.