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investment basicsYour super balance at retirement can be affected by the investment strategy you choose today, so be super confident by understanding the basics of investing. With 9 different investment options to choose from, at Health Super you have the flexibility to change the way your super is invested as your circumstances change.
four facts about investing
choose from one of 9 investment optionsMembers of a Health Super Accumulation, Spouse and Pension account can choose from five Standard Investment options and four Socially Responsible Investment options (SRIs), giving you the flexibility to take greater control of your future and make the financial decisions that are right for you. Learn more about the Member Investment Choice options available to you. The options are all different and each is designed to suit a particular type of investor.
how is your super invested?There are a number of asset classes that make up each Health Super investment option. Each asset class has different characteristics with regard to the level of investment return and the degree of risk to which your super may be exposed. They are outlined below. The asset classes are:shares (Australian and international) Shares represent part ownership of a company (Australian or international) and are generally bought and sold on a stock exchange. Shares are generally considered to be more risky than most other asset classes because their price tends to fluctuate more than other asset classes. International shares may also be affected by currency values. However, over the longer term, shares tend to outperform other asset classes. alternatives (growth and defensive) Alternatives refer to a wide range of non-traditional assets such as private equity, infrastructure and hedge funds. Alternative assets can have a higher risk profile and may be less liquid (less easily turned into cash) than other investments. Alternative investments may experience volatile movements in prices due to potentially higher-risk levels. Health Super’s investment in alternative assets includes hedge funds and may include non-traditional assets other than hedge funds. Health Super may invest in alternative asset classes to take advantage of investment opportunities that may arise in these markets, while also diversifying Health Super’s sources of return. Alternative assets will be divided into Alternative Growth and Alternative Defensive based on each asset’s risk/return profile. Alternative Growth assets are investments that should provide higher long-term return opportunities, but potentially have greater risk or volatility. Alternative Defensive assets might include investments with a lower return, but which are generally more consistent (but may not have the growth potential of some other higher risk investments). Property, which is sometimes treated as its own asset class for asset allocation purposes, is considered part of Alternatives in relation to Health Super’s Standard & SRI investment options. Property generally involves investing directly, through an unlisted or listed trust. Each trust holds real property investments in sectors such as offices, industrial or retail property. Listed property trusts are generally quoted on the stock exchange and are bought and sold like shares. Historically, unlisted property investments have been less volatile than listed property or shares. Depending on the risk/return profile of a property investment, it may be considered an Alternative Growth or Alternative Defensive asset. Over the long term (a period greater than five years), growth assets such as shares and Alternative Growth assets tend to achieve greater returns than income assets such as cash, fixed interest and Alternative Defensive assets. However, it is important to note, that in the short term (a period less than three years), growth assets may experience greater volatility in returns. fixed interest Fixed interest securities, also known as bonds, can be thought of as loans. You pay cash for the bond, and in return, you receive regular interest payments from the bond issuer for an agreed period of time. The value of the bond can fluctuate based on interest rates and investor sentiment. When the bond matures, the loan principal is repaid in cash. Historically, bonds have provided a less volatile investment than share markets due to their stable interest payment. cash Cash generally refers to investments in bank bills, commercial paper and similar securities that have a short investment timeframe i.e. typically less than one year. Cash investments generally provide a stable return, with negligible potential for capital loss. important tip: Over the long-term (a period greater than five years), growth assets such as shares and property tend to achieve greater returns than income assets such as cash and fixed interest. It is important to note, however, that in the short term (a period less than three years) growth assets may experience greater volatility in returns.
understanding the principlesYou may have heard of the saying: "The higher the risk, the higher the return". This is what it means: riskRisk can be defined as the probability that your investment may not meet your expectations due to a rise or fall in its value over a given period of time. returnReturn is the change in the value of assets (i.e. what you earn on your investment after fees, costs and taxes are deducted). Returns can be positive or negative. Health Super’s nine investment options invest across different asset classes, carry different levels of risk and produce different levels of return over time. Generally speaking, an investment with a higher expected return would exhibit a higher level of risk.
3 ways Health Super manages your investmentThe Trustee of Health Super manages investment risk by not putting all your eggs in the one basket. Basically, your super is spread:
For more information concerning returns and risk you should read the Health Super Product Disclosure Statement. |
