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Should you invest in ASX shares like the Aussie super funds?

Kenneth Hall

The Aussie super funds are cashed up and looking for the next opportunity to deploy their considerable capital.

According to an article in the Australian Financial Review (AFR), both Unisuper and Hostplus have high cash balances right now. Two of Australia’s largest super funds are sitting and waiting for a big sell-off to buy ASX shares on the cheap.

Concerns over the coronavirus outbreak and other macro issues hitting markets mean there could be the right buying opportunities for those with dry powder.

So, should you be waiting and investing like the Aussie super funds in 2020?

Can investing like the super funds really work?

In principle, the strategy of sitting on the sidelines until prices drop is great. I like to think of market drops as a sale where I can buy good assets for a cheaper price.

However, there are differences between institutional and individual investors. For one, the amount of cash that an $85 billion fund like Unisuper is sitting on is different to having a spare $5,000 sitting around to invest.

Apart from that, there is also the problem of missing out on potential gains by investing like the Aussie super funds. History has shown the best gains are often in the 18-24 months prior to a market crash.

For instance, you might be wondering whether or not to invest in an ASX growth share like Afterpay Ltd (ASX: APT) but you’re worried about it being overpriced. 

If Afterpay shares go on to gain 100% in the next year, and then we see a 30% share price crash, a $1,000 investment would still be worth $1,400. Had you sat on your money instead, you would avoid the crash but still be left with less.

If that’s the case, investing like the Aussie super funds might not pay off in the long-run.

Foolish takeaway

With this in mind, I am a big believer in the old mantra of “time in the market beats timing the market”. The February earnings season is a great chance to have a look at the financial position of ASX companies.

While investing like the cashed-up super funds can deliver value, it can be tough. If you want to buy and hold good quality ASX shares like BHP Group Ltd (ASX: BHP), then the short-term fluctuations shouldn’t change your strategy dramatically.

The post Should you invest in ASX shares like the Aussie super funds? appeared first on Motley Fool Australia.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020