Recent investment changes you should know about

November 2016

We've recently made some changes to:

  • the way we’re describing investment-related fees and costs
  • the amount of those investment-related fees and costs for some of our investment options, and
  • the objectives, suggested investment timeframe and risk profile for several options.

Underlying changes to some investment options

During a recent review of our investments, we adjusted the performance objectives, suggested investment timeframes, summary risk levels and expected frequency of negative returns for several options in light of current market conditions.

It's important you're aware of these changes. We recommend speaking with a professional financial adviser before making any changes to your investment strategy.

 Investment option Nature of change Before 1 October 2016 After 1 October 2016
Capital Stable Performance objective CPI + 2% per year over the suggested timeframe CPI + 1.5% per year over the suggested timeframe
Balanced (MySuper) Return target CPI + 4.9% per year over 10 years CPI + 5.1% per year over 10 years
Sustainable Balanced Expected frequency of negative annual return Four in 20 years Five in 20 years
Cash
Performance objective CPI + 0.5% per year over the suggested timeframe RBA cash rate over the suggested timeframe
Minimum suggested investment timeframe Three years One year
Summary risk level Very low Low
Australian Bond Performance objective CPI + 1% per year over the suggested timeframe CPI over the suggested timeframe
Diversified Credit Income Performance objective CPI + 1.5% per year over the suggested CPI + 0.5% per year over the suggested
Expected frequency of negative annual return Four in 20 years Five in 20 years
Australian Shares Expected frequency of negative annual return Five in 20 years Six in 20 years
Summary risk level High Very high
Global Companies in Asia Expected frequency of negative annual return Five in 20 years Six in 20 years
Summary risk level High Very high

Return objectives describe the returns we aim but not guarantee to be achieved, after fund taxes and investment expenses (before deducting account-based fees).

No other information has changed at the time of writing. Our dedicated investments webpage has more in-depth information about all of our options.

New requirements for investment fees and costs

Super funds will soon be required to describe investment fees and costs differently. Introduced by the Australian Securities and Investments Commission (ASIC), this change is designed to bring more consistency to the way funds describe their investment-related costs, allowing members to compare products more fairly and accurately. We adopted the new requirements on 1 October this year. All funds are required to adopt the changes.

Before the change, inconsistencies in the way funds described their investment fees and costs meant that ‘like-for-like’ investments could appear to have very different pricing. For example, certain investment options might appear cheaper than similar choices offered by competitors—depending on how they report their indirect fees and costs.

What do the changes look like?

Traditionally, most super funds have split investment-related fees and costs into different groups: those charged by the fund itself, and those charged by third-party service providers.

Like other funds, we rely on third party investment managers to invest some of our funds under management. These managers charge investment fees, which we've traditionally classified as 'indirect costs'.

We don’t charge you a fee for investing your funds, which is demonstrated by the fact that our ‘investment fee’ has been $0 until 1 October. Instead, we deduct investment costs before applying investment returns to your account.

Going forward, you’ll see costs split and reported as two separate amounts. Part will remain as an ICR and the rest is now described as an ‘investment fee’. Additional costs not previously disclosed and which must now be disclosed are included as an 'investment fee'.

It's worth noting that we’ve previously disclosed many of the fees and costs in our ICRs that ASIC now requires all funds to communicate as an investment fee or ICR. This, combined with the fact that some of the additional costs we need to communicate have been offset by lower performance fees during the most recent financial year, have resulted in only moderate increases in the aggregate fees and costs across some of our investment options.

You can read more in the Fees and costs tables in our relevant Product Disclosure Statements and on our website. You'll see these new changes on your Benefit statement from 30 June 2017. All funds are required to make these changes.

Investment fees and ICRs to 30 June 2016

At the end of each financial year, we calculate the costs incurred within each investment option for the previous financial year. The costs for each investment option have changed as per the new ASIC requirements. Several options have seen their total costs increase as follows:

Investment option Accumulation Before 1 October 2016
ICR (%) Investment fee ICR (%) Investment fee
Sustainable Balanced 0.06 0.30 0.00 0.23
Sustainable High Growth 0.06 0.34 0.00 0.27
Listed Property 0.06 0.44 0.00 0.37
Global Environmental Opportunities 0.06 0.23 0.00 0.16
Global Companies in Asia 0.06 0.69 0.00 0.62

The ICRs and investment fees shown above are indicative only and based on the ICR and investment fee for these investment options for the year ended 30 June 2016, including several components which are estimates only. The actual amount you’ll be charged in subsequent financial years will depend on the actual fees, costs and taxes incurred by the Trustee in managing the investment option.

The combined ICR plus investment fee for our other options remained the same or decreased for the year ended 30 June 2016 compared with the previous year. Please see our Investment costs page for more information on the fees and costs relevant to your investment option(s).