Best Bal­anced Su­per Funds


Money Magazine Australia - - CONTENTS -

A big ex­po­sure to growth as­sets, plus low fees, is a re­ward­ing com­bi­na­tion

Hostplus’s win­ning bal­anced su­per fund has been the No. 1 per­former over one, three, five, seven and 15 years, ac­cord­ing to Su­perRat­ings’ SR50 sur­vey to June 30, 2018.

Hostplus favours ac­tively man­aged in­vest­ments and this fund holds around 90% in growth as­sets and 10% in de­fen­sive as­sets such as credit and diver­si­fied fixed in­come. Over the past year, per­for­mance has been boosted by strong re­turns from its hold­ings in di­rect prop­erty (12% over the year to June 18), un­listed in­fra­struc­ture (12%) and pri­vate eq­uity (15%).

Hostplus also has a large hold­ing of ven­ture cap­i­tal com­pa­nies with in­no­va­tive prod­ucts. It has com­mit­ted over $1 bil­lion to Aus­tralian ven­ture cap­i­tal man­agers, sup­port­ing in­no­va­tion in biomed, fintech, clean en­ergy, au­ton­o­mous cars and cy­ber­se­cu­rity at the end of Septem­ber 2018.

The as­set al­lo­ca­tion of the Hostplus bal­anced fund in­cludes Aus­tralian eq­ui­ties (25%), in­ter­na­tional devel­oped eq­ui­ties (20%), in­ter­na­tional emerg­ing mar­ket eq­ui­ties (8%), di­rect prop­erty (13%), in­fra­struc­ture (12%), pri­vate eq­uity (6%), credit (8%), al­ter­na­tives (6%) and diver­si­fied fixed in­ter­est (2%).

While Hostplus’s port­fo­lio weight­ings have re­mained fair- ly con­sis­tent over the past 10 years, it has tweaked the al­lo­ca­tion to im­prove its de­fen­sive char­ac­ter­is­tics and flex­i­bil­ity. It re­duced the bal­anced op­tion’s fixed in­ter­est al­lo­ca­tion by 2% on the ba­sis of its poor prospec­tive yields and in­creased its ex­po­sure to al­ter­na­tives. It also cut back on Aus­tralian eq­ui­ties and upped its al­lo­ca­tion to in­ter­na­tional eq­ui­ties by 2% as well as in­creas­ing ex­po­sure to pri­vate eq­uity by 1% by re­duc­ing its in­vest­ment in credit se­cu­ri­ties.

Hostplus fees for the bal­anced op­tion are 1.06% as well as a weekly ad­min­is­tra­tion cost of $1.50, to­talling $78 per year, un­changed since 2005. It is one of a few su­per­an­nu­a­tion funds that charges a flat fee and does not charge an as­set­based ad­min­is­tra­tion fee.

First Su­per, a $3 bil­lion in­dus­try fund, comes sec­ond for its strong dou­ble-digit per­for­mance from as­set classes such as in­fra­struc­ture, pri­vate eq­uity and prop­erty as well as stan­dard as­set classes such as Aus­tralian and global shares.

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