Middle East unrest and private credit: How CFS is managing your money

In light of recent developments across global markets, including geopolitical tensions in the Middle East and changes in parts of credit markets, some Australians may be feeling uncertain about what this means for their super, pension or investments. These developments can contribute to periods of market volatility and short-term uncertainty.

This update provides context on recent developments. The key takeaway - it's important to stay focused on your investment goals and trust the experts, like CFS, to manage your money through challenging times in markets.

Two developments have contributed to recent market volatility: ongoing conflict in the Middle East and changes in parts of credit markets, including private credit.

Recently, events in the Middle East have increased uncertainty for investors. This has contributed to some turbulence in markets, particularly in areas like energy prices where concerns about potential disruptions to supply can quickly affect pricing. 

These events and their effects continue to unfold, so it’s likely markets will continue to fluctuate as more information becomes available. 

At the same time, there have been a small number of isolated events within parts of private credit. These include a small number of credit events in the US late last year, pressure in some technology and software related borrowers, and a UK insolvency linked to fraud rather than broad market weakness.

It’s important to note these issues have different causes and don’t, on their own, indicate a broad breakdown across private credit markets.

While market uncertainty can increase volatility in the short term, the effect on global markets has so far been relatively contained. Markets are forward-looking and tend to assess new information as it becomes clearer.

Financial markets have continued to operate in an orderly way. While markets continue to move, we have not seen the kind of sudden, extreme disturbances that typically accompany major economic shocks. That matters, because it suggests investors are assessing developments carefully rather than reacting emotionally.

The major movement in markets is the price of oil. If oil stays elevated for an extended period, it could feed into inflation, with the potential to create negative longer-term economic effects. Inflationary effects are more likely to result in periods of softer or more prolonged market conditions, rather than sharp, double-digit market falls over a matter of days.

History shows that for events like these to materially affect markets, they typically need to be broad, prolonged and significantly disrupt global economic activity. In many cases, regional conflicts have had limited and temporary effects on global markets.

As global financial markets move up and down, the value and returns of your super and investments may change in the short term.

While this can be concerning, history shows that markets rise over time. That’s why it’s important to avoid kneejerk reactions, keep your long-term savings and investment goals in mind, and carefully consider your options before making any changes to your investment strategy.

Your investments with CFS are typically diversified across a broad mix of asset classes, regions and investment types, which are actively monitored as part of our ongoing investment process.

Read more about staying in the market.

The CFS Investment team is experienced at managing periods of uncertainty and has been putting measures in place to reduce the impact of increased market volatility for some time.

We actively manage portfolios to help reduce risk while remaining positioned to take advantage of opportunities that can emerge during changing market conditions. This includes maintaining diversification across asset classes, regions and sectors, and regularly reviewing investments to ensure they remain appropriate.

Strong investment governance underpins this approach. Decisions are supported by robust risk management processes, ongoing monitoring of investments and regular oversight to ensure portfolios continue to align with their long-term objectives.

This disciplined approach helps ensure portfolios are not reliant on any single market, sector or outcome.

While volatility can feel uncomfortable, it is a normal part of investing. You can be confident that your money is being actively managed by professionals whose focus is helping you stay on track for the long term.

As with any significant market event, it’s generally best to avoid impulse reactions and trust the experts who are actively managing your money. Periods of volatility and unsettling headlines are a normal part of investing, and markets have navigated similar events many times before.

However, if you’re concerned about your investment strategy or would like to discuss your personal circumstances, speaking with your financial adviser can help put recent events into context.

If you have any questions about your super or investments, you can also contact us on 13 13 36, Monday to Friday, 8:30am–6pm (Sydney time).

Periods of market volatility can attract increased scam and phishing activity. We encourage you to stay vigilant by taking a few simple steps to help protect your account:

• Ensure multi‑factor authentication is enabled
• Check your email address and mobile number are up to date in your online account
• Keep your devices and apps up to date with the latest software updates
• Be cautious of unexpected emails, texts or calls.

As a reminder, CFS will never contact you to ask for your login details, passwords or one‑time security codes. 

Visit our Online Safety Hub or the Australian Government’s cyber security site for more tips to reduce the risk of fraudulent activity online.