Your super is your money, so it pays to understand how it's invested.

Choosing how to invest your super is a personal decision that comes down to your specific circumstances and appetite for taking risks.

In investment terms, risk refers to the chance that the actual return will be different to the expected return. As a long-term investment, your super will be exposed to many market cycles and different levels of risk.

If you don’t plan on accessing your super any time soon, putting your money into an investment option that is exposed to growth assets could be a great way to maximise your super’s potential.

But if you’re planning to access your super in the next few years, you might not have the time to ride out the market volatility. In that case, a defensive investment strategy might help you better protect your money.

Building blocks

It’s important to spread your money across different types of assets which is called diversification. Diversification can reduce investment risk as asset classes tend to perform differently at different points in the economic cycle.

All of our pre-mixed investment options are diversified across a range of asset classes with the current and target mix for each option available here.

Below is some additional information on the main asset classes that we invest in.

Discover our investment options

View our options

The least risky of all asset classes, cash is often chosen by investors who want to access their money in the short to medium term.

The chances of negative returns from cash investments are much lower than other asset classes, however the expected returns are also lower. There is also a chance that the buying power of your money is reduced because it may not keep up with inflation.

The value of a cash investment will fluctuate due to a number of factors, primarily with the rises and falls in interest rates.

All of our pre-mixed investment options include an allocation to cash, and members can also invest exclusively in cash by selecting our Cash single asset class option.

A fixed income investment is a loan to a government, semi-government authority or large corporate in exchange for regular interest payments, plus repayment of the principal amount at maturity.

Interest is paid to investors over the life of the investment, usually at a fixed rate. However, for some bonds, the interest payments and/or principal are adjusted for the rate of inflation. These are known as ‘inflation-linked bonds’ and they are designed to help protect investors from inflation.

While fixed income investments such as bonds are usually less volatile than many other investments such as shares, they also have a lower expected return over the long term.

It is important to note that fixed income investments are not without risk and do not provide a fixed rate of return like a term deposit. Bonds are traded in a marketplace with buyers and sellers like many other investment types which means they are exposed to price movements, and the possibility exists for low or negative returns from time to time.

Bond values are driven by prevailing interest rates and expected interest rate movements. In general, when interest rates rise, the market value of bonds tends to fall, and when interest rates fall, bond values tend to rise. This can have a significant impact on performance.

All of our pre-mixed investment options include fixed income investments, other than High Growth, and we also offer Australian Fixed Interest and International Fixed Interest single asset class options.

Our international fixed income investments are 100% hedged, meaning they are protected against the impact of currency fluctuations on investment returns.

Equities or shares are a portion or share of a company that can be bought or sold on an exchange. Via equity investments, investors can access both large and small companies across a range of industries in Australia and overseas.

The return investors receive from investing in equities can be via capital gains (and losses), as well as income in the form of dividend payments.

Over the long term, returns from equities tend to be higher than those achieved by property, fixed income and cash investments. But in the short term, their performance is more volatile and returns can be negative, making shares a higher risk investment.

Various factors like consumer sentiment, commodity prices and company performance can all have an impact on the value of daily share prices.

All of our pre-mixed investment options include Australian and international equity investments, and we also offer the below single asset class options:

  • Australian Equities – managed by index-replicating manager Vanguard Investments Australia Ltd.
  • International Equities - managed by index-replicating manager Vanguard Investments Australia Ltd. Note that this option is unhedged, and as such, will fluctuate both as a result of changes in the value of the underlying shares and currency movements.
  • Australian Equities Socially Responsible Investment (SRI) – managed by Redpoint Investment Management, this option invests in companies that meet specific criteria with respect to environmental, social and governance considerations.

A list of our top shareholdings is available here.


Property investments include investments in office buildings, shopping centres and industrial estates, as well as residential property such as apartment buildings and retirement villages. Investors can access property investments either directly or indirectly by purchasing units in a property trust (unlisted or listed).

Returns from property investments reflect a combination of rental income and capital growth and are dependent on a range of economic factors, such as interest rates and employment, as well as the location and quality of properties.

Property investments are subject to a moderate to high degree of risk and are most suitable for long term investors seeking high growth over the medium to long term, who are willing to accept fluctuations in returns and the possibility of negative returns over the short term.

At First State Super we invest in a combination of unlisted and listed property assets which are traded on stock exchanges globally.

All of our pre-mixed investment options include an allocation to both Australian and global property investments, and we also offer a single asset class Property option.


Infrastructure assets are the utilities and facilities that provide essential services to communities. Examples include utilities (electricity, gas, water and communications), power (including renewables), transport (airports, seaports, toll roads and rail) and social infrastructure assets (hospitals, education facilities and community infrastructure such as a convention centre). New infrastructure sub-sectors which exhibit similar features to traditional infrastructure investments, for example land title registries, have also developed over time.

Due to their scale and importance, infrastructure investments typically have high barriers to entry, but offer investors a steady income stream, potential for capital growth over the long term, and lower volatility than other growth assets such as equities. However, they are not risk-free. For example, changes to government regulation, usage volumes, and rising or falling interest rates, can all have an impact on their value.

Similar to property, investors can access infrastructure investments via direct investments in individual assets, or indirectly via unlisted or listed pooled funds. All of our pre-mixed investment options include infrastructure investments which reflect a combination of direct and indirect unlisted assets.

Credit income

Credit income covers a range of alternative debt investments. Like fixed income, credit income investments involve a loan to a borrower in exchange for regular interest payments, plus repayment of the principal amount at maturity. However, compared to traditional fixed income investments the loans are typically to borrowers with a lower credit rating and, as a result, command a higher rate of return to compensate the investor for the risk of default. Examples of credit investments include loans to unlisted infrastructure and real estate companies.

Our Growth, Balanced Growth and Conservative Growth pre-mixed investment options include an allocation to credit income investments.

Private Equity

Private equity offers investors an opportunity to invest in companies, both in Australia and abroad, that are not listed on a stock exchange.

Such companies can include large established companies needing investment and expertise to support future growth plans, as well as smaller, rapidly growing businesses at various stages of development.

Compared to listed equity markets, the private equity market is less efficient and less regulated, which creates opportunities for skilled managers to add value. However, private equity investments are typically illiquid, higher risk investments and so are best suited to investors with a medium to long-term investment horizon.

Except for the Diversified Socially Responsible Investment option, all of our pre-mixed investment options include an allocation to private equity investments.

Other alternatives

Real return strategies and hedge funds

Unlike traditional fund managers which are often restricted to investing in a single asset class (e.g. Australian equities), managers of real return strategies (known as ‘dynamic-multi asset’ managers) and hedge funds, have a wider range of allowable investments and are able to utilise a combination of equities, bonds, currencies, commodities and other liquid asset classes.

They can make investments in these asset classes via physical exposures or through the use of derivatives.

These managers aim to deliver returns above CPI or an official cash rate by dynamically moving around their exposure to the various asset classes.


SRI alternative strategies

SRI alternative strategies include both hedge funds and real return funds (described above), where the investment strategy is compliant with our guidelines for the Diversified SRI option, in addition to private market investments.

These private market investments may be in a single asset class, where the investment is expected to contribute positively to the environment or to society, while delivering an expected rate of return commensurate with the risk of the investment.

Examples include investments in renewable energy assets and private equity investments which aim to generate employment or other social benefits.

Guidelines for measuring investment risk

The super industry has developed guidelines for measuring investment risk. The purpose is to have a consistent approach to risk measurement so comparisons of different investment options are more valid and meaningful.

The industry guidance paper can be viewed here.

The Standard Risk Measure (SRM) allows you to compare investment options that are expected to deliver a similar number of negative annual returns over a 20-year period within and across funds.

It’s important to keep in mind that this won’t give you a complete or accurate picture of your investment risk. For example, the SRM doesn't take into account how large a loss might be, or how well an option is likely to perform based on its ranking.

Standard Risk Measure
Risk band Risk label Estimated number of years of negative annual returns over any 20 year period
1 Very low Less than 0.5
2 Low 0.5 to less than 1
3 Low to medium 1 to less than 2
4 Medium 2 to less than 3
5 Medium to high 3 to less than 4
6 High 4 to less than 6
7 Very high 6 or greater

What you need to know

The Standard Risk Measure approach has been based on:

  • Long term strategic asset allocations for the fund’s investment options
  • Forward looking asset class assumptions
  • Returns after tax and investment management fees but before administration fees

After tax returns

While it is recommended that the disclosure of these risk measures is before tax (ignoring the impact of franking credits and other tax), we have chosen to use after-tax calculations to provide for the impact of franking credits and other taxes, where applicable. This means that some investments with exposure to Australian equities have a lower risk rating.

However, we believe this provides a more realistic comparison between investment options as investment returns are credited to member accounts after tax and investment management expenses.

What Standard Risk Measures have been applied to our investment options?

The Standard Risk Measures applied to our investment options are shown in the Member Booklet Supplement: Investments (for accumulation members) and the Member Booklet Transition to Retirement Income Stream or the Member Booklet Retirement Income Stream (for income stream members).

Managing investment volatility

Market volatility and fluctuating returns are a normal part of the investment cycle. While you’ll never be able to eliminate volatility entirely, there are ways to manage it and even make it work in your favour. See our ‘Managing investment volatility’ fact sheet for more information.