During these unpredictable and volatile share market times, I am sure you will agree that we need to be cognisant about where our superannuation is invested.
For many of us, our superannuation is our second largest financial asset outside of our family home.
From my experience, we know what type of fund we have invested in such as ‘Balanced’, ‘High Growth’ or ‘Conservative’ but many investors do not know the asset allocation of their particular fund.
For example, many believe that a ‘Balanced’ fund would invest equally across the four main investment asset categories, being:
Cash & Fixed Interest about 25%
Australian Shares about 25%
International Shares about 25%
Property about 25%
However, if you look more closely at some of the large industry funds, this is not the case. This is because there is no universal definition of a ‘Balanced’ fund.
As we show below, the asset allocation across three of the major industry superannuation funds is very different even though they are each classified as a ‘Balanced’ fund*.
| RESTBalanced Benchmark | Australian Super Balanced | HOSTPLUSBalanced (default option) | |
| Cash | 20% | 3% | 0% |
| Bonds & Fixed Interest | 10% | 12% | 0% |
| Australian Shares | 13% | 22% | 22% |
| International Shares | 18% | 33% | 30% |
| Property | 8% | 7% | 13% |
| Other including Private Equity, Infrastructure, Credit Alternatives | 31% | 23% | 35% |
| 100% | 100% | 100% |
* This table has been completed from the said industry funds’ websites.
The purpose of this table is to explain that the term ‘Balanced Fund’ means different things to different people. It also is defined differently by the various industry superannuation funds themselves.
Based on the above table one may conclude that the funds holding the least amount of cash would perform the best in the “good” times or during a bull market. Whereas the funds holding a greater percentage in cash may be less impacted in a global recession or bear market.
The purpose of this article is not to criticise a fund or imply one is better than another, rather it is to advise readers to look beyond the title to see where your money is invested. A balanced fund may not be equally diversified across the main investment asset classes.
Should you require more information about your superannuation, please feel free to contact Peter Quinn by submitting an enquiry or calling us on +61 2 9580 9166.