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A buy and sell unit price is determined for each investment option. The difference between the two is called the buy/sell spread and reflects the cost of buying and selling the underlying assets of each investment option.
Investment option | Buy spread | Sell spread | Total | Diversified Shares | 0.26% | 0.26% | 0.52% | Growth | 0.29% | 0.29% | 0.58% | Balanced (Default) | 0.31% | 0.31% | 0.62% | Socially Responsible Balanced | 0.22% | 0.22% | 0.44% | Conservative Balanced | 0.23% | 0.23% | 0.46% | Conservative | 0.15% | 0.15% | 0.30% | Australian Shares | 0.19% | 0.19% | 0.38% | International Shares | 0.33% | 0.33% | 0.66% | Diversified Property | 1.07% | 1.07% | 2.14% | Diversified Fixed Interest | 0.00% | 0.00% | 0.00% | Cash | 0.00% | 0.00% | 0.00% |
While there is no switch fee to change your investment options, your account balance may change as a result of the applicable buy/sell spread for your switch.
For example, based on the table above, the buy/sell spread applicable when switching $100,000 from the Conservative option to the Balanced option = 0.62% x $100,000 = $620. Therefore, the remaining account balance after the switch will be $100,000 – $620 = $99,380.
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There is no switch fee, but you will incur a buy/sell spread when you change investment options.
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Yes, fixed interest investments can produce negative returns. Negative returns can occur when interest rates increase.
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All of the Fund’s returns are listed after tax and fees. If you have your money invested in a bank, the earnings will be taxed at your marginal tax rate and the earning rate declared will be before taxation.
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You can change your investment option(s) on a weekly basis. Switches are updated on the system once a week, usually on a Tuesday. To have your switch made effective on the Tuesday your completed Investment choice form must be received by the Fund by close of business on the preceding Monday. If your form is received after COB on the Monday, your investment switch will have an effective date for the Tuesday of the following week.
If there is a public holiday on the Monday, then the switch will be effective on the Wednesday and the cut off for receipt of forms is close of business Tuesday.
If a public holiday falls on the both the Monday and the Tuesday, then the cut off date for receiving switch forms will be the first business day after the public holiday and the investment switch will be effective two business days after the public holiday.
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Future contributions can be directed to different investment option(s) than those investment options in which you have your existing account balance invested.
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You can invest in up to 11 of the investment options in any combination as long as the total investment split equals 100%.
If you select more than one option, this can match the amount of growth and defensive assets that best suits your needs and your tolerance to risk.
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The Balanced option is designed for members who are looking for a medium to high level of return over a five-year period and are prepared to accept a medium to high level of volatility. This option may not be suitable for everyone and the Trustee offers 11 different investment options so that members can make an investment choice to best suit their requirements.
To achieve its return objectives, the Balanced option is invested 75% in growth assets (eg shares and property). These assets will sometimes produce negative returns.
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In positive years, the Fund’s Allocated Pension Plan members receive the benefit of higher returns as there is no tax on investment earnings in the Fund, but when returns are negative this is reversed.
When returns are negative, the Superannuation Plan members receive the benefits of tax credits due to investment losses, whereas the pension members do not receive these benefits as there is no tax payable.
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The Cash option is invested in two investment funds, the Colonial First State Premium Cash Fund and the BT Managed Cash Fund as well as in deposits with two major Australian banks. Most of the investments (over 90%) are held in bank deposits, bank bills and negotiable certificates of deposits with the four major Australian banks. When the Government announced its bank deposit guarantee scheme in October 2008, it appeared that all such cash investments would be covered by the guarantee at no cost.
The Government subsequently announced that it would charge a fee for the guarantee on large investments. The fee would generally be between 0.7–1% depending on the type of investment. If this fee was paid by the superannuation fund, it would mean that the return to members from the cash investment would be reduced by the amount of the Government charge. For example, with the most recent reduction in interest rates, if the cash return before the Government fee was 3% then the return after the Government fee would decrease to below 2.3%.
The Trustee has considered the issue and has decided not to pay the Government fee at this stage. This means that the Fund will not be reducing returns to members by the Government guarantee fee and the Government guarantee will not apply to investments in cash. The Trustee believes that this is a prudent positioning to take as most of the investments are with the major Australian banks.
Nevertheless, the Trustee is vigilant and constantly monitors this situation.
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