“We know from behavioural finance that when markets get quite volatile the behavioural and emotional reaction is to head for the exit, sell out of it and go and sit in bonds or cash for a while till markets settle back down,” said Mr Bowerman.

“The problem is you typically end up selling out at the bottom.”

The problem with trying to time markets is that investors not only have to decide when to get out but also when to get back in, he said.

“Often people wait for markets to go up 5 or 10 per cent and then get back in and they’ve missed that initial run-up that markets often have in a short period of time,” he said.

In the current environment, SMSF trustees should focus on tuning out short-term market noise and ensure their portfolio is well diversified, Mr Bowerman said.

“It’s really just about getting the risk setting right because I think at times people get overly focused on the returns they’re trying to achieve out of the portfolio without really understanding what the risks are within the portfolio [of their SMSF],” he said.

“In the markets, from time to time there will be volatility, and that should be expected and understood, [but] if you’ve diversified, your shares may be down but your bonds may be up, or property will be up and shares down.”