Investment changes - Fund manager for the Ethically Minded option, updated Strategic Asset Allocations (SAA) and investment objectives
April 20 2024
Effective 11 January 2021, changes will be made to some of the investment options available to ESSSuper members in the Accumulation Plan, Beneficiary Account, Working Income Stream and/or Retirement Income Stream.
| Change |
Impact of the change |
1. Changes to Ethically Minded investment option
|
Effective 11 January 2021, the ESSSuper Board has approved the appointment of Pendal Fund Services Limited (Pendal) as the sole investment manager of the Ethically Minded option. From that date, all new and existing proceeds for the Ethically Minded option managed under the interim arrangements will be transferred across to be managed by Pendal.
|
2. Changes to Strategic Asset Allocations (SAA) and investment objectives
|
Effective 11 January 2021, changes will be made to the strategic asset allocations and investment objectives for some investment options available to ESSSuper members in the Accumulation Plan, Beneficiary Account, Working Income Stream and/or Retirement Income Stream.
|
1. Changes to Ethically Minded investment option
After considering a range of alternative investment managers for the Ethically Minded option, the ESSSuper Board has approved the appointment of Pendal Fund Services Limited (Pendal) as the sole investment manager of the Ethically Minded option effective 11 January 2021.
From 11 January 2021, all new and existing proceeds for the Ethically Minded option managed under the interim arrangements will be transferred across to be managed by Pendal. Please refer to the Additional information section below for the Strategic Asset Allocations and the asset class ranges of the Ethically Minded option to be managed by Pendal.
The investment fee for members in the Ethically Minded option temporarily decreased from 0.73% to 0.47% when AMP Capital was terminated. Investment fees will further decrease from 0.47% to 0.38% when Pendal is appointed on 11 January 2021.
Should you wish to change your asset allocation selection, please login to your Members Online account or complete an Investment Options Change form (E146), available on our forms page, and return it to us.
2. Changes to Strategic Asset Allocations (SAA) and investment objectives
Effective from 11 January 2021, the SAA and the asset class ranges for High Growth, Growth, Basic Growth, Balanced, Conservative, and Defensive investment options will be adjusted. The new SAAs are expected to increase the likelihood of all investment options meeting their risk and return objectives. Please refer to the Additional information section below for further details.
Change to investment objective – Defensive option
The ESSSuper Board annually reviews the Fund’s investment strategy, which includes consideration of the appropriateness of each investment option’s risk and return objectives. At the last investment strategy review, the Board approved a lower return objective and higher risk band for the Defensive option.
Accumulation Plan, Beneficiary Account, and Income Stream (Working Income Stream)
The Defensive option’s return objective decreased from CPI + 1.0% to CPI + 0.5% and the risk band increased from 1 – VERY LOW to 2 – LOW. The lower return objective and higher risk band reflects specialist advice from the Fund’s Investment Advisor, who estimates lower returns and slightly higher risks for investors in cash and fixed income markets, which form a major portfolio allocation for the Defensive option.
| Defensive |
To 10 January 2021 |
From 11 January 2021 |
| Objective |
CPI + 1% p.a. over 2 year period |
CPI + 0.5% p.a. over 2 year period
|
| Risk Band |
1 - VERY LOW |
2 - LOW |
Income Stream (Retirement Income Stream)
The Defensive option’s return objective decreased from CPI + 1.5% to CPI + 1.0% and the risk band increased from 1 – VERY LOW to 2 – LOW. The lower return objective and higher risk band reflects specialist advice from the Fund’s Investment Advisor, who estimates lower returns and slightly higher risks for investors in cash and fixed income markets, which form a major portfolio allocation for the Defensive option.
| Defensive |
To 10 January 2021 |
From 11 January 2021 |
| Objective |
CPI + 1.5% p.a. over 2 year period |
CPI + 1% p.a. over 2 year period
|
| Risk Band |
1 - VERY LOW |
2 - LOW |
Change to investment objective – Cash option
The ESSSuper Board annually reviews the Fund’s investment strategy, which includes consideration of the appropriateness of each investment option’s return objectives. At the last investment strategy review, the Board approved a lower return objective for the Cash option.
Accumulation Plan, Beneficiary Account, and Income Stream (Working Income Stream)
The Cash option’s return objective changed from the Reserve Bank of Australia’s (RBA) Cash Rate Target to the Bloomberg AusBond Bank Bill Index. The new objective better reflects the prospective returns available to cash investors. Returns from cash investments recently declined below the RBA Cash Rate Target, driven by the RBA’s intervention in cash markets to stimulate the Australian economy in the aftermath of the Coronavirus outbreak.
| Cash |
To 10 January 2021 |
From 11 January 2021 |
| Objective |
To provide a return after fees (but before tax) equivalent or higher than the RBA Cash Rate. |
To provide a return after fees (but before tax) equivalent or higher than the Bloomberg AusBond Bank Bill Index.
|
Income Stream (Retirement Income Stream)
The Cash option’s return objective changed from the RBA Cash Rate Target to the Bloomberg AusBond Bank Bill Index. The new objective better reflects the prospective returns available to cash investors. Returns from cash investments recently declined below the RBA Cash Rate Target, driven by the RBA’s intervention in cash markets to stimulate the Australian economy in the aftermath of the Coronavirus outbreak.
| Cash |
To 10 January 2021 |
From 11 January 2021 |
| Objective |
To provide a return after fees equivalent or higher than the RBA Cash Rate. |
To provide a return after fees equivalent or higher than the Bloomberg AusBond Bank Bill Index.
|
Defensive Fixed Income asset class
The Fund is also making enhancements to the Sovereign Bonds asset class, which will be renamed Defensive Fixed Income effective 11 January 2021. Historically the Sovereign Bonds asset class has exclusively comprised investments in government debt. The forward-looking return prospects of these investments have declined to very low levels. The new asset class structure will introduce investments in low risk, alternative debt investments where return prospects have not been as impacted by recent market conditions.
Additional information
Strategic Asset Allocation (SAA) Changes for Accumulation Plan, Beneficiary Account, and Income Streams
Effective from 11 January 2021 the Strategic Asset Allocation and the asset class ranges will be adjusted for the High Growth, Growth, Basic Growth, Balanced, Conservative, Defensive, and Ethically Minded investment options of the Accumulation Plan, Beneficiary Account, and Income Streams as follows:
High Growth investment option
| |
To 10 January 2021 |
From 11 January 2021 |
|
SAA (%) |
Ranges (%) |
SAA (%) |
Ranges (%) |
| Australian Shares |
28.0 |
10 - 40 |
29.5 |
10 - 40 |
| International Shares |
41.5 |
20 - 55 |
42.0 |
20 - 55 |
| Private Equity |
0.0 |
0 - 10 |
0.0 |
0 - 10 |
| Property |
9.0 |
0 - 30 |
7.0 |
0 - 30 |
| Infrastructure |
12.5 |
0 - 30 |
13.0 |
0 - 30 |
| Alternative strategies |
5.0 |
0 - 15 |
4.5 |
0 - 15 |
| Multi-asset strategies |
0.0 |
0 - 20 |
0.0 |
0 - 20 |
| Credit |
4.0 |
0 - 15 |
4.0 |
0 - 15 |
Growth investment option
| |
To 10 January 2021 |
From 11 January 2021 |
|
SAA (%) |
Ranges (%) |
SAA (%) |
Ranges (%) |
| Australian Shares |
19.0 |
5 - 30 |
21.0 |
5 - 30 |
| International Shares |
24.0 |
10 - 40 |
26.0 |
10 - 40 |
| Private Equity |
0.0 |
0 - 10 |
0.0 |
0 - 10 |
| Property |
10.0 |
5 - 15 |
9.0 |
0 - 20 |
| Infrastructure |
10.0 |
0 - 15 |
12.0 |
0 - 25 |
| Alternative strategies |
6.5 |
0 - 15 |
4.0 |
0 - 15 |
| Multi-asset strategies |
4.0 |
0 - 25 |
4.0 |
0 - 25 |
| Credit |
13.5 |
0 - 30 |
12.5 |
0 - 30 |
| Defensive fixed income |
8.5 |
0 - 20 |
8.0 |
0 - 20 |
| Cash |
4.5 |
0 - 15 |
3.5 |
0 - 15 |
Basic Growth investment option
| |
To 10 January 2021 |
From 11 January 2021 |
|
SAA (%) |
Ranges (%) |
SAA (%) |
Ranges (%) |
| Australian Shares |
25.0 |
5 - 35 |
26.5 |
5 - 35 |
| International Shares |
36.5 |
10 - 50 |
37.5 |
10 - 50 |
| Private Equity |
0.0 |
N/A |
0.0 |
N/A |
| Property |
8.0 |
5 - 15 |
7.0 |
0 - 20 |
| Infrastructure |
10.0 |
0 - 15 |
11.0 |
0 - 25 |
| Alternative strategies |
0.0 |
0 - 10 |
0.0 |
0 - 10 |
| Multi-asset strategies |
2.0 |
0 - 30 |
0.0 |
0 - 30 |
| Credit |
7.5 |
0 - 25 |
7.5 |
0 - 25 |
| Defensive fixed income |
8.5 |
0 - 20 |
7.5 |
0 - 20 |
| Cash |
2.5 |
0 - 15 |
3.0 |
0 - 15 |
Balanced investment option
| |
To 10 January 2021 |
From 11 January 2021 |
|
SAA (%) |
Ranges (%) |
SAA (%) |
Ranges (%) |
| Australian Shares |
14.0 |
5 - 25 |
11.5 |
5 - 25 |
| International Shares |
16.5 |
5 - 30 |
20.0 |
5 - 30 |
| Private Equity |
0.0 |
0 - 10 |
0.0 |
0 - 10 |
| Property |
9.0 |
5 - 15 |
9.0 |
0 - 20 |
| Infrastructure |
9.0 |
0 - 15 |
11.5 |
0 - 25 |
| Alternative strategies |
5.5 |
0 - 15 |
4.5 |
0 - 15 |
| Multi-asset strategies |
7.0 |
0 - 25 |
5.0 |
0 - 25 |
| Credit |
13.0 |
0 - 30 |
12.5 |
0 - 30 |
| Defensive fixed income |
16.0 |
5 - 40 |
16.0 |
5 - 40 |
| Cash |
10.0 |
0 - 25 |
10.0 |
0 - 25 |
Conservative investment option
| |
To 10 January 2021 |
From 11 January 2021 |
|
SAA (%) |
Ranges (%) |
SAA (%) |
Ranges (%) |
| Australian Shares |
6.0 |
0 - 15 |
6.0 |
0 - 15 |
| International Shares |
9.0 |
0 - 15 |
10.5 |
0 - 15 |
| Private Equity |
0.0 |
0 - 5 |
0.0 |
0 - 5 |
| Property |
7.0 |
2.5 - 12.5 |
6.0 |
0 - 15 |
| Infrastructure |
6.5 |
0 - 15 |
9.0 |
0 - 20 |
| Alternative strategies |
2.0 |
0 - 6 |
0.0 |
0 - 6 |
| Multi-asset strategies |
11.0 |
0 - 30 |
11.0 |
0 - 30 |
| Credit |
9.0 |
0 - 15 |
9.0 |
0 - 15 |
| Defensive fixed income |
12.5 |
0 - 30 |
15.0 |
0 - 30 |
| Cash |
37.0 |
30 - 60 |
33.5 |
15 - 55 |
Defensive investment option
| |
To 10 January 2021 |
From 11 January 2021 |
|
SAA (%) |
Ranges (%) |
SAA (%) |
Ranges (%) |
| Australian Shares |
3.0 |
0 - 10 |
3.0 |
0 - 10 |
| International Shares |
4.0 |
0 - 10 |
5.0 |
0 - 10 |
| Private Equity |
0.0 |
N/A |
0.0 |
N/A |
| Property |
3.0 |
0 - 10 |
3.0 |
0 - 10 |
| Infrastructure |
4.0 |
0 - 10 |
4.0 |
0 - 10 |
| Alternative strategies |
0.0 |
N/A |
0.0 |
N/A |
| Multi-asset strategies |
7.0 |
0 - 25 |
7.0 |
0 - 25 |
| Credit |
5.0 |
0 - 10 |
5.0 |
0 - 10 |
| Defensive fixed income |
13.0 |
0 - 40 |
25.0 |
0 - 40 |
| Cash |
61.0 |
50 - 90 |
48.0 |
30 - 80 |
Ethically Minded investment option
| |
To 10 January 2021 |
From 11 January 2021 |
|
SAA (%) |
Ranges (%) |
SAA (%) |
Ranges (%) |
| Australian Shares |
26.4 |
15 - 40 |
26.0 |
15 - 50 |
| International Shares |
34.4 |
15 - 48 |
34.0 |
15 - 50 |
| Property |
7.0 |
0 - 20 |
5.0 |
0 - 20 |
| Infrastructure |
7.0 |
0 - 7 |
0.0 |
0 - 20 |
| Alternative strategies |
4.8 |
0 - 6 |
5.0 |
0 - 20 |
| Multi-asset strategies |
0.0 |
N/A |
10.0 |
0 - 20 |
| Credit |
9.9 |
0 - 18 |
0.0 |
0 - 20 |
| Defensive fixed income |
7.7 |
0 - 27 |
15.0 |
0 - 30 |
| Cash |
2.8 |
0 - 20 |
5.0 |
0 - 20 |