Asset classes are groups of investments that have similar characteristics. They are the building blocks of our Investment Funds.
Key points:
- Asset classes fall into two main groups, growth or defensive. Some asset classes are a blend of the two.
- We invest in liquid investments like shares, as well as illiquid investments like unlisted property and infrastructure.
- The asset classes we invest in include:Ìý Ìý
- Australian shares
- International shares
- Infrastructure
- Property
- Liquid alternatives
- Fixed incomeÌý
- Credit incomeÌý
- Cash
Diversification
Spreading your investments across different types of assets is called diversification. Diversification can help reduce the amount of money you could lose if one investment or asset class performs poorly. This is because not all investments and asset classes perform in the same way at the same time. For example, when shares are performing poorly, bonds may be performing well, so a portfolio that holds both should produce a more stable overall return.
All our diversified Funds are invested across a range of asset classes.
We also offer single asset class Funds. You can select one single asset class Fund or choose a combination of these to diversify your investments.
Asset class types
Before choosing an Investment Fund, it’s important to understand how risky it is. One way to assess this is to consider how much a Fund holds in growth assets and defensive assets.
The table below shows the growth/defensive classification of each of our asset classes.
Scroll table horizontally on mobile
| Asset class type | Description | Asset classes |
|---|---|---|
Growth assets |
Growth assets can generate higher returns over the long term. However, returns can be volatile. If you invest in growth assets, you can expect your account balance will go up and down in the short term. |
Australian shares International shares Property (listed) Infrastructure (listed) |
Defensive assets |
Defensive assets are typically more stable than growth assets over the short term but tend to generate lower returns over the long term. Returns may not always be positive. Returns generally come from income rather than an increase in the value of the investment. |
Cash Fixed income Credit income |
A mix of growth and defensive assets |
Asset classes with both growth and defensive characteristics. |
Infrastructure (unlisted) Property (unlisted) Liquid alternativesÌý |
Liquid and illiquid investments
We invest in both liquid and illiquid assets.Ìý
- Liquid investmentsÌýcan be easily sold and converted into cash. They include shares, fixed income investments such as bonds, listed property, listed infrastructure and liquid alternatives.
- Illiquid investments are those that can’t be converted into cash for a fair market value quickly or easily. They include unlisted property and unlisted infrastructure.
Ìý
The diversified Funds can invest in a mix of liquid and illiquid investments, while the single asset class Funds invest only in liquid investments.
Our asset classes
Here we describe each of our asset classes to help you understand how the Funds are invested.
For more information on our asset classes, refer to theÌýProduct Disclosure Statement.
Shares
Shares are investments that give you partial ownership of a company. They can be bought or sold on an exchange. The value of shares depends on the performance of the company and the overall share market. Investing in shares offers the potential for high returns. However, share prices can change quickly and by large amounts. This makes them a high-risk investment.
We invest in both Australian and international shares across a range of industries.
Note our Australian and International shares asset classes may include small allocations to unlisted companies.
InfrastructureÌý
Infrastructure is the systems and facilities that provide essential services to communities. Infrastructure investments can include:
- utilities, such as electricity, gas and water
- energy, such as power, renewables and storage
- transport, such as toll roads, railways, airports and seaports
- social infrastructure, such as hospitals and convention centresÌý
- digital, such as fibre and data centres
- registries, such as land and motor vehicle registries
- infrastructure-like agriculture, such as water and timber assets
Our infrastructure asset class can include both unlisted and listed infrastructure companies.Ìý
Property
Property investments can include both unlisted and listed property assets. Unlisted property assets include office buildings, industrial estates, shopping centres and residential property.
Listed property investments are property owning entities and property businesses listed on a share market. The returns from listed property investments are closely tied to the overall real estate market. However, their value can also be impacted by general share market sentiment. As a result, their prices can change quickly and by large amounts, meaning they are generally higher risk than unlisted property.
Liquid alternatives
Our Funds hold defensively-oriented liquid alternatives strategies, such as hedge funds, which aim to provide positive returns when share markets are falling.
Liquid alternatives strategies have a wide range of allowable investments and can use a combination of shares, bonds, currencies, commodities and other liquid investments. They can make investments in these asset classes directly or through the use of derivatives. Liquid alternatives may be designed to provide diversifying sources of return and help manage portfolio risk, and can generally be readily converted into cash.
Fixed income
Fixed income investments pay regular interest over a set term, usually at a fixed rate. They can include bonds and securitised assets.
- A bond is a loan to a government or large corporation. The investor receives regular interest payments called coupons. The loan amount, known as the principal, is repaid to the investor when the loan period ends.
- Securitised assets are created by bundling together debts, for example residential home loans, into tradeable securities. Investors in these securities receive regular payments similar to bond interest payments.
Fixed income investments are defensive as most of their return tends to come from income rather than capital growth. While this means returns are typically more stable, it does not mean they will always be positive.
Their value tends to move in the opposite direction to interest rates. In other words, when interest rates rise the value of fixed income securities tends to fall, and when interest rates fall their value will typically rise. Other changes that can affect their value include:
- the circumstances of the individual lender
- economic conditions, and
- liquidity (how many buyers and sellers there are).
Credit income
Credit income covers a range of debt investments. Like fixed income, credit income investments involve lending money to a borrower. However, compared to fixed income, borrowers usually have a higher credit risk profile. This means the potential returns are typically higher than traditional fixed income though the risk of default is also greater.
Credit income invests in loans and bonds across a variety of industries such as:
- infrastructureÌý
- real estate
- financials, andÌý
- different corporate sectors.Ìý
CashÌý
Cash includes term deposits and other short-term interest-bearing investments issued by banks.Ìý
The cash allocation within our diversified Funds can also include other short- to medium-term money market and debt securities. These types of cash investments have a higher risk than traditional cash assets, but also the potential for higher returns.
Cash typically provides a low risk, short-term investment with fairly stable returns compared to other asset classes. However, expected returns are also lower and may not keep up with inflation.