Asset Allocation

Growth MySuper option and Pension Growth option

The following chart displays the benchmark strategic asset allocation for 2016-17.

The following table sets out the long-term strategic asset allocation ranges within which the option will be expected to operate and the portfolio target allocation. No prior year actual allocations are available as this option was only introduced from 1 July 2016.

The actual allocations will vary within the Strategic Asset Ranges for the particular asset class depending upon the investment environment and asset pricing.  

Asset Class

Strategic Asset Range

2016-17 Benchmark

2016 Allocation

2015 Allocation

Australian Shares

20 – 45%

32.50%

-

-

Overseas Shares

20 – 45%

32.50%

-

-

Property

0 – 25%

15%

-

-

Other growth investments

0 – 10%

0%

- -

Total Growth Assets

 

80%

-

-

 

 

 

   

Fixed Interest

5 – 25%

15%

-

-

Cash & Liquid Assets

2 – 10%

5%

-

-

Total Defensive Assets

 

20%

-

-

Level of Risk: Risk Band 6: High – chance of a negative return greater  than 4 and less than 6 times every 20 years.

Balanced Option and Pension Balanced Option (these were called the 'Managed' and 'Pension Managed' options until 30 June 2016)

The following chart displays the benchmark strategic asset allocation for 2016-17.

The following table sets out the long-term strategic asset allocation ranges within which the option will be expected to operate, the portfolio target allocation and the actual allocations for both this and the previous year.

The actual allocations will vary within the Strategic Asset Ranges for the particular asset class depending upon the investment environment and asset pricing. 

Asset Class

Strategic Asset Range

2016-17 Benchmark

2016 Allocation

2015 Allocation

Australian Shares

20 – 40%

28%

26.24%

33.86%

Overseas Shares

20 – 40%

30%

31.40%

23.52%

Property

0 – 20%

10%

8.71%

9.10%

Other growth investments

0 – 20%

2%

0.58% 0.56%

Total Growth Assets

 

70%

66.93%

67.04%

 

 

 

   

Fixed Interest

10 – 35%

25%

27.06%

25.08%

Cash & Liquid Assets

2 – 15%

5%

6.01%

7.88%

Total Defensive Assets

 

30%

33.07%

32.96%

Level of Risk: Risk Band 5: Medium to High – expected negative returns over a 20 year period is 3 to less than 4 times.

 

Cash Option and Pension Cash Option

The following chart displays the benchmark strategic asset allocation for 2016-17.


The Pension Cash option will invest in an externally managed cash fund and/or a portfolio of directly held securities with a term to maturity of one year or less. Typical investments may include (but not limited to) term deposits, bank bills, short term fixed income securities and cash at call.   

Asset Class

Benchmark

Cash

100%

 Level of Risk - Very Low: expected chance of negative returns over a 20 year period is less than 0.5. 

 

Strategic Asset Allocation Variation Tolerance

The Trustee acknowledges market valuations may rise and fall over time. Market fluctuations may cause the value of the Fund’s investments within a particular asset class to fall outside the Strategic Asset Allocation (SAA) range. Additionally, during periods of investment restructures, an option's investments may temporarily fall outside the SAA range.

In order to provide for temporary fluctuations, a 2% tolerance is added to the SAA ranges. The following describes the actions should an option's investments fall outside the SAA ranges:

a)      If an asset class within an option exceeds it's SAA range, but is within the tolerance:

Action: The Trustee will consider the breach of the SAA range and determine what action, if any, is to be taken to rebalance the option.

b)      If an asset class within an option exceeds it's SAA range by more than the tolerated amount:

Action: the Chief Investment Officer will provide a recommendation to the Trustee to rebalance the portfolio within a three month period taking into account market conditions and costs of rebalancing.

·         The Trustee has the discretion to approve the recommendation or take no corrective action if it is believed the breach of SAA range is temporary and likely to self-correct with 3 months. In such an event no further action is required other than recording the decision.

·         If the Trustee forms the opinion the portfolio is unlikely to self-correct within a 3 month period, the Trustee shall determine the course of action it intends taking to rebalance the portfolio to within the SAA ranges, and the timelines for actions to be implemented. 

·         Members and APRA should be notified within 30 days of a breach of the SAA range when the tolerance is exceeded. The notification shall include information on the action being undertaken to rebalance the portfolio.