The trustee’s investment mission is to deliver reliable long-term returns to members through a suite of investment options spanning the risk spectrum, including a MySuper option. We also have a set of eight investment beliefs that serve as guiding principles when making decisions and setting our investment strategies.
We don’t lose sight of the fact that we want to generate good returns to help you save more for your retirement – after all, that’s the business that we’re in as a super fund. But we also don’t take lightly the importance of being a little more conservative in order to help protect the super you’ve already built up, particularly in times of poorer market performance.
Directly comparing the investment returns of Fund A with those of Fund B can be common but there can be dangers in doing this simply based on absolute numbers, or rankings based on these figures.
One of the key drivers of returns generally relates to the amount of risk different funds and trustees are prepared to take to achieve their investment objectives. This risk appetite is usually expressed through the strategic asset allocation (SAA) for each investment option.
When we develop our investment strategies, we focus on producing sustainable long-term returns that achieve the established investment objective for each of our investment options. We also try to achieve this goal with lower downside risk, where possible. This generally means that we will have less exposure to share/equity markets within our SAA than many of our peers.
This position also means that we expect to underperform compared to peers when equity markets produce larger (absolute) positive returns. International and Australian equity markets have remained as the highest performing asset classes over the last several years. Accordingly, an SAA that is more balanced, such as ours, will be less likely keep up with more aggressive peers during these periods. However relative positions can turn around, especially after large equity market downturns. We saw this following the Global Financial Crisis, when our more defensive positioning resulted in our returns topping the relative performance rankings.
Each of our options has a different objective. As an example, the objective for the Balanced option for Accumulate Plus is to achieve an average return, after applicable fees and taxes, of CPI + 2.5% pa over a 5-year period. By focussing on meeting the stated objective rather than focussing on relative or peer comparisons, we aim to give members more certainty around the likely returns for each option, which in turn can help in choosing the investment options to suit your needs. Over the last several years, all of our diversified investment options have consistently met or exceeded their stated investment objective.
On balance with investment performance, we also focus on maintaining a competitive fee structure to try to deliver the best overall net effect across both returns and fees that we can. Both our Accumulate Plus and Retirement Access products continue to hold the highest ratings from several industry rating agencies, Super Ratings, Chant West and SelectingSuper, including a Super Ratings Platinum recognising us as a best value for money fund, with fees significantly lower than the industry median, based on fees disclosed in PDSs for account balances of $50,000 and above.
We cannot predict what future returns are likely to be. However, given the current Australian and international cash rates, which are low by historical standards, we expect that achieving the level of absolute returns experienced over the last few years will be very difficult. This may see funds increasing their risks in order to try and chase higher returns.
Our trustee is committed to maintaining its downside risk focus and will be working with our investment advisers to ensure that our investment strategies continue to be designed and managed to meet the investment objectives that have been established. We are comfortable that our investment beliefs and strategies will continue to deliver the right outcomes for our members over the long term.
Important note: You should remember that returns are not guaranteed and may be positive or negative. Past investment performance is not a reliable indicator of future performance.