The changes outlined below have been introduced to enhance the strategies and will not affect the overall risk and return profiles of each of the strategies.
Changes to return objectives
The return objectives for the Growth and Balanced Investment Options were reduced to reflect lower return expectations over their investment periods.
| 2019-20 | |
|---|---|
| Growth | CPI+3.0% |
| Balanced | CPI+2.0% |
| Conservative | CPI+1.0% |
| Cash | Cash |
| University Conservative Diversified* | CPI+0.5% |
| University Cash | Cash |
| Trustee Selection | CPI+5.0% |
*The University Conservative Diversified Strategy closed on 28 February 2021.
Strategic asset allocation changes
As part of the review, several strategic asset allocation changes have been made to the Trustee Selection Strategy. While we continue to maintain a constructive longer-term outlook, we are mindful of the heightened volatility in the shorter term and these changes are intended to further improve the diversification and provide additional downside risk protection.
Growth, Balanced and Conservative Strategy
There were no asset allocation changes for these investment options. The permitted range for foreign currency exposure was widened due to the desirable downside protection properties that foreign currency exposure can offer.
Trustee Selection Strategy
Trustee Selection is a defined benefit scheme with different investment time horizon to DC options. This allows Trustee Selection to benefit from additional premium by investing into less liquid assets. This is reflected in the further small increase in the allocation to unlisted infrastructure. Additionally, we have included Defensive strategies to mitigate sequencing risk associated with Trustee Selection. Other changes were also made to the strategic asset allocations to improve the diversification and portfolio efficiency, including an increase in the allocation to developed market listed equities sourced from Australian equities and growth alternatives, along with an increased allocation to foreign currency.
No changes have been made to the asset allocations for Cash and University Cash Strategies.