It’s time to check in on your investment strategy
COVID-19 has taught us many things and it’s times like this that remind us that life’s full of change, so sometimes it makes sense that you may also want to change how your super’s invested.
It’s important to remember, if you’re an ESSSuper Defined Benefit member, investment returns don’t affect the benefit you receive from your Defined Benefit fund. However, for members with an ESSSuper Accumulation Plan, Beneficiary Account, or Income Stream account your returns are based on investment performance.
We understand that everyone is different, that’s why we have many carefully selected options you can choose from to help you reach your retirement goals.
Talk to any investment advisor and one of the first things they will try to establish is how risk averse you are. So what does that really mean and how can it provide a guide to finding the right investment mix for your super?
The relationship between market volatility and performance is often called a risk/return trade-off. Understanding how comfortable you are with different investment options and the risk associated with each, will allow you to play an active role in where your super is invested.
You should keep in mind that super is a long-term investment, and by selecting one option or a combination of options, you can tailor your investments to match your risk appetite, and long term goals.
Let's take a look at our investment options
ESSSuper offers a range of investment strategies, each of which place a different emphasis on growing your super versus protecting what you’ve already got. They range from using a prudent degree of risk to deliver higher potential growth, to a more defensive approach, with more stable returns, but potentially limited growth.
By exploring the different strategies, you’ll see how they can differ in performance and what impact they may have on your super. This can help you decide on the appropriate investment strategy to fund your short-term cash needs, while your medium and long-term assets deliver growth over the longer term.
No matter which course of action you choose, you can be sure that ESSSuper follows a downside protection philosophy that governs our approach to investing and assisting our members to achieve great retirement outcomes. To learn more about what this means, click here.
Let's take a look at two of our conservative Investment Options to see how they performed.
- In the month of March 2020, our Defensive Option declined -1.6% when equity markets fell by more than -10% and, according to the March 2020 Superratings survey, the median investment option categorised as 'Secure', fell by -2.0% 1.
- Despite the financial market volatility in March 2020, our Defensive Option returned 1.2% over the year to March, and according to the March 2020 SuperRatings survey, beating the median ‘Secure investment option’ return of 0.8%2.
- Our Defensive Option has outperformed the median ‘Secure Investment option’ over 1, 3 and 5 year periods to 31 March 2020 (2nd quartile over all periods).
- The Defensive Option is designed to preserve the purchasing power of your savings against rising prices (inflation), while also generating a small return. Its return objective is to outperform the Consumer Price Index by 1.5% p.a.
- Conversely our Cash Option is unlikely to preserve the purchasing power of your savings against rising prices, however it won’t be directly exposed to falls in equity markets.
To understand your appetite for risk, try our investment risk profiler
Investing: getting back to basics
When it all comes down to it, making informed decisions on the right super investment for you depends on three things:
- What type of lifestyle would you like in retirement;
- What sort of investor you are; and
- Understanding different investment strategies
What sort of lifestyle do you want in retirement?
Retirement can deliver some of the best years of our lives, but only if you properly prepare for it. That’s why we’ve developed AssistMe, to help you understand your retirement income forecast and the sort of income you might achieve in retirement.
AssistMe was created to help you understand what gaps there may be in your retirement income needs, how long your super may last and what you can do to make it go further.
Find out more about our investment approach
ESSSuper follows a number of foundation principles when deciding to invest our members’ funds in asset classes. To see more on our investment approach, take a couple of minutes to look at the easy to understand online investment tool or call our Member Service Centre on 1300 650 161.
We're here to help
Our aim is to help every member achieve a comfortable and financially secure life in retirement through investment options that meet their retirement objectives over the long-term. Before you make any change to your super investment strategy, we encourage you to speak to an ESSSuper financial adviser, to book an appointment please call us on 1300 650 161 or email us at firstname.lastname@example.org