Investment Strategy
In making decisions about investment strategy and management, the Trustee considers the overall circumstances of the Fund and any applicable legislative requirements.
The Fund's investments are managed in a manner to ensure sufficient liquidity to meet expected cash flow requirements. The Fund's assets are directed into externally managed investment products or portfolios with professional investment managers.
The Trustee uses the services of an asset consultant, JANA, to provide advice in relation to appropriate asset allocation and selection and management of professional investment managers. The managers will have responsibility for the investment of the assets within specified limits. Each manager will be expected to display the skill and expertise of a professional investment manager with investment objectives compatible with that of the Fund.
Investment managers are permitted to use futures, options and other derivative instruments to assist with the effective management of the Fund's assets. However, these instruments may not be used to gear the portfolio. The Trustee expects that, over the long term, the use of these instruments will enhance the returns of the Fund's assets. Over shorter periods, the effect on investment returns is expected to vary from year to year.
Labour standards, or environmental, social and ethical considerations are not taken into account in selecting, retaining or realising the investment of the Fund. The Trustee will specify and continually monitor the minimum and maximum ranges of investments in Cash, Fixed interest, Australian Equities, International Equities, Property, Growth Alternatives and Defensive Alternatives.
Investment Objectives
| Investment Option |
Investment Objectives |
| Balanced |
To achieve high returns over the longer term, but with low to moderate risk. Earnings should exceed inflation by at least 3% averaged over rolling 3 year periods (CPI + 3%). The probability of a negative return for this option is 1 in 5 years. |
| Capital Stable |
To achieve attractive but stable returns on a consistent basis with low volatility. Earnings should exceed inflation by at least 2% averaged over rolling 3 year periods (CPI + 2%). The probability of a negative return for this option is 1 in 11.2 years. |
| Super Growth |
To achieve high returns over the longer term. Earnings should exceed inflation by at least 5% averaged over greater than 5 year periods (CPI + 5%). The probability of a negative return for this options is 1 in 4.1 years. |
| Australian Equities |
To achieve a return, before tax and fees that exceeds the S&P/ASX300 Accumulation Index over rolling 3 year periods. The probability of a negative return for this option is 1 in 3.2 years. |
| International Equities |
To achieve a return, before tax and fees that exceeds the MSCI World ex-Australia Index over rolling 3 year periods. The probability of a negative return for this option is 1 in 4.1 years. |
| Property |
To achieve a return before tax and fees that exceeds the Mercer Australian Unlisted Property Index over rolling 3 year periods. The probability of a negative return for this option is 1 in 7 years. |
| Fixed Interest |
To achieve a return, before tax and fees that exceeds the 50% UBS Composite Bond Index (total) and 50% Lehman Global Aggregate Index (hedged) over rolling 3 year periods. The probability of a negative return for this option is 1 in 7.7 years. |
| Cash |
To achieve consistent stable returns with low volatility. Earnings should exceed inflation over rolling annual periods and in the medium term outperform the median cash manager over rolling 3 year periods. This option is not likely to have a negative return. |
| Bank Cash |
To achieve stable returns while providing increased capital protection. Earnings should match the RBA bank index over time. This option will typically provide a lower return than the Fund's main cash option. This option is not likely to have a negative return.
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Investment Managers
The Trustee of AustSafe Super appoints JANA Investment Advisers to advise on investment managers and oversee their performance. The table outlines the asset classes which AustSafe Super is invested in and the investment managers appoint by the Trustee. The managers listed below are current as at 30 June 2010.
| Aberdeen Asset Management |
International Equities, Cash |
| AMP Capital Investors |
Growth Alternatives, Property, Cash |
| Aurora Investment Management |
Defensive Alternatives |
| BlackRock Global Investors |
Defensive Alternatives |
| Credit Suisse |
Fixed Interest |
| GMO (Australia) |
Defensive Alternatives |
| Harbourvest |
Growth Alternatives |
| Hastings |
Growth Alternatives |
| ING |
Growth Alternatives |
| Integrity Investment Management |
Australian Equities |
| IronBridge Capital Management |
International Equities |
| JANA |
International Equities |
| Lazard |
International Equities |
| Macquarie |
Australian Equities |
| Marathon |
International Equities |
| Members Equity Bank |
Fixed Interest |
| NEPEM |
Growth Alternatives |
| Northward |
Australian Equities |
| Orbis |
Australian Equities |
| Paradice Investment Management |
Australian Equities |
| Perennial Investment Partners |
Fixed Interest |
| PIMCO |
Fixed Interest |
| Platinum |
International Equities |
| Principal Global Investors |
Defensive Alternatives |
| T Rowe Price |
International Equities |
| Trinity |
Growth Alternatives, Property |
| Various Australian Deposit Institutions |
Cash |
| Wilshire Global Advisors |
Growth Alternatives |
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Interim Earning Rates and Reserving
Effective 19 July 2010 AustSafe Super will now be introducing weekly earning rates.
Interim earning rates are determined weekly and are based on the weekly movement in asset values for each investment option adjusted for tax, investment management and other costs.
If you exit the Fund during the financial year, earnings will be applied to your account for the period you were a member of the Fund. Earnings are applied using an 'interim earning rate' for each completed week and a 'cash rate' for the period from the last interim rate to the day of exit. Interim earning rates are based as closely as possible on the actual returns achieved by each investment option each week. The 'cash rate' is based on the interest earned on the Fund's' operational bank account, adjusted for tax and other costs. Interim earning rates, cash rates and investment performance updates are regularly posted on the website.
If you switch Member Investment Choice options or claim a partial withdrawal, the interim earning rates for each complete week will be used in the calculation of your balance with the cash rate applied for the incomplete week. Earnings will be calculated and will be capitalised in your account as at 30 June or upon exit from the Fund.
The actual earning rate for each of the investment options may not always be the same as the final investment earnings of the Fund, due to the effect of Fund expenses, tax and the Fund’s Reserving Policy.
As a general rule the Fund will look to allocate the total earnings of each of the member investment choice options.
The Trustee will maintain reserves in accordance with the Fund’s Trust Deed. The reserves will consist of any surplus generated from operating activities and any difference between investment earnings and the amount of investment earnings allocated to member accounts in the Fund’s default investment option.
The Trustee will maintain reserves for a number of purposes including:
a) prudential business reasons including the implications of the earning rate process;
b) to smooth the earning rate of the Fund’s default investment option;
c) to meet the expenses of the Fund; and
d) to meet capital adequacy requirements.
The Fund’s reserves may be split for management and control purposes into separate sub accounts. The average level of reserves will be maintained at a level of 0% to 3% with an upper limit of 5% of member balances. Where total reserves exceed the upper limit, the Trustee will distribute a proportion of the reserve in accordance with the Fund’s Earning Rate Policy.
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