Your super is your money, so it pays to understand how it gets invested.
Investing might seem like a world of smoke and mirrors, but the principles are surprisingly simple.
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 is described as the chance that the actual return will be different to what's expected. 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 investment options that are 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.
If you need help making an investment choice, you can speak to us.
Understanding your options
We offer a range of investment options to cater for different stages of life and financial goals.
If you don’t want to make a choice, we’ll make sure your money is working as hard as you are by investing it in our MySuper Life Cycle strategy. This is our default mix, and the blend of asset classes is tailored to your stage of life.
Confused? Let's take a step back.
All types of investments fit into one of four classes:
- Fixed interest
Ideally, you’d always have money in every asset class to dilute the potential negative impacts on your investments - this is what’s called ‘diversification’, the financial term for not putting all your eggs in one basket.
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 are much lower, but that also means the annual returns are not as high as investments in equities and property. 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.View daily unit prices
Fixed interestShow more
Sometimes referred to as a bond, fixed income is a loan offered to a government or large corporate in exchange for a fixed interest rate, plus repayment of the principal amount at maturity.
We invest fixed income in Australian and international governments, semi-government authorities, and international corporations.
Our international fixed income assets are 100% hedged, meaning they are protected against the losses that can happen when the Australian dollar goes down in value.
This is a great asset option if you’re working to a shorter time frame and more risk-averse.
Bear in mind however that when interest rates rise, the value of your investment goes down.View daily unit prices
Shares or equities tend to give higher returns than cash, fixed income and property. But in the short term, their performance is more volatile and annual returns can be negative.
Various factors like consumer sentiment, commodity prices and company performance can all have an impact on the value of daily share prices.
Our shareholdings includes domestic and international equities.
Property is an asset class that typically attracts a higher level of risk because there is a chance of volatility and negative fluctuations in the short term.
Over the long term, rental income and market demand are the key drivers of investment performance.
Listed properties are treated as securities that are traded like stocks on an exchange that typically invests directly in real estate.
Unlisted properties don’t provide daily valuations. Their value is calculated on an appraisal basis.
We invest in both listed and unlisted property trusts.
One of the greatest advantages of investing your super is the access to investments that would ordinarily be out of reach.
Infrastructure investments have a high barrier to entry, but they offer a steady income stream and less volatility than equities.
They are typically in sectors that are government-owned, or where one company has a market monopoly, such as energy, transport and communications.
That isn’t to say it’s risk-free: changes in government or industry regulations can have an impact on their value, along with rising and falling interest rates, and how many people are using the service or system.View daily unit prices
The super industry has developed guidelines for measuring investment risk. This 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 Standard Risk Measure Guidance Paper for Trustees.
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 Income Stream (for income stream members).