What is it?
The Credit Income option is one of a range of investment choices available to members. It is considered a conservative investment option which is designed to help members see a modest return with lower levels of risk.
The Credit Income option has similar credit risks to the Bonds option; however, the capital value is less sensitive to movements in interest rates than the Bonds option.
Who should invest in the Credit Income option?
The Credit Income option is designed for members with a medium-term investment plan (up to 5 years) who are seeking to achieve a return above inflation. Specifically, the option addresses investors who either don’t want to hold a stake in interest rates or who are concerned about fluctuations in interest rates.
What is the investment objective?
The Credit Income option seeks to achieve an investment return, after taxes and fees, that exceeds the benchmark return (the Bloomberg AusBond Bank Bill Index) by 2.5% per annum over rolling 10 year periods.
How long should I invest in the Credit Income option?
Because there is the opportunity for the value of investments to go down in the short term, we recommend a minimum investment term to avoid short-term market volatility.
For the Credit Income option, the suggested minimum investment term is 3-5 years.
A risk estimate is the potential for a negative return in any given year over a 20-year rolling period.
While our goal is to provide members with a positive return, external factors can influence investment performance, including broader economic trends. Risk is defined by how often an investor should expect to see a negative return out of every 20 years.
The risk estimate for the Credit Income option is Medium (negative annual return likelihood: 2 to less than 3 years out of 20). That means, in any given year, there is a 10-15% chance for a negative return.
The Credit Income option is invested primarily in corporate debt. This option is similar to our Bonds option in terms of credit risk; the difference is that with the Credit Income option its capital value is less sensitive to movements in interest rates (duration risk).
Fees and other costs
The Credit Income option fees will be:
- Investment management fee of 0.32%pa
- Indirect cost ratio of 0.15%pa.
For each $50,000 invested, members can expect to pay $433 in investment fees, administration fees and indirect costs for this option each year. These fees are however subject to change.
How can I change my investment choices?
You can change your investment mix at any time. Just login to your Members online account and click ‘Your account’ from the options in the left hand menu.
Alternatively, you can download and complete our Investment Switch form.
Need help making an investment choice?
Making an investment choice can be difficult. Download the "Your investment options super fact sheet" for more information on all of our investment options available to you.
Take advantage of our complimentary, over-the-phone advice service and obtain a personal recommendation on which of our investment options may be right for you.