Pre-mixed investment options are flexible, with the ratio of asset classes changing over time to take advantage of market conditions.
To help reduce the impact of large market fluctuations and corrections, our pre-mixed options are invested across a range of asset classes such as shares, cash and fixed income. These asset classes are the building blocks of your investment and the main driver of returns.
Asset allocation refers to how much of a particular asset class is held by each investment option.
As a guide, each year we set long-term asset allocation percentage targets for each investment option, known as strategic asset allocations (SAA). We also establish asset allocation ranges which are the minimum and maximum amounts we can invest in each asset class. During the year we may move towards or away from the strategic asset allocations percentages based on our outlook for the economy and investment markets. The asset allocations at a particular point in time are referred to as the actual asset allocations.
Our asset allocation approach
We use an active approach to asset allocation that allows us to take advantage of market conditions by temporarily increasing or decreasing our exposure to a particular asset class. This can help shield members from the risks of being overexposed to expensive markets and add additional incremental returns by increasing exposures to asset classes when they are attractive. This is one of the ways we look to add value to our investments and is outlined in the below video.