Find answers to your investment questions.
Investing means your money’s being put to work to grow in value and/or earn you income. You can invest in a range of assets. For example, you’re invested in property if you’re paying off your home. And you’re invested in cash if you’re earning interest from a bank account. Investing in shares (or equities) means you own a part of a company. And if you’re invested in bonds, this usually involves you lending money to the government or a company for a specified length of time for the purpose of earning a return.
An asset is something you invest in, like property, shares, bonds, or putting cash in the bank. So a group of ‘property’ investments form an asset class, and so do a group of ‘shares’, and so on. Assets usually fall into two main categories: defensive and growth.
Defensive assets are typically less risky and more stable over the short term, but tend to produce lower returns over the long term. Cash and Fixed Interest are examples of defensive assets.
Growth assets are typically higher risk and more volatile in the short term, but tend to produce higher returns over the long term. Shares and property are examples of growth assets.
We invest your money across five main ‘types’ of investments (or asset classes): Cash, Fixed Interest, Direct Property, Alternatives and Shares.
Of CareSuper’s 13 investment options, some are single asset classes, such as Property, while others, such as the Balanced option, invest in multiple asset classes.
A ‘return’ is the amount of money an investment earns or loses. It’s usually expressed as a percentage. For example, if you’re invested in the Balanced option and this option returns 9%, then the total value of your super account will increase by 9%.
The net investment return represents the returns you get from your investments after all investment-related fees, costs and taxes are taken into account. That is, the impact of your investments on your account balance.
All investments come with risk, which can be short term or long term.
Short-term risk is the potential for your balance to go up and down in value over time. If the returns from an investment are likely to change a lot over the short term, it is called a ‘high risk’ or ‘volatile’ investment.
If the returns are fairly consistent and don’t change much over the short term, it’s called a ‘low risk’ or ‘stable’ investment.
Long-term risk can include things like not having enough money in retirement or your savings not keeping pace with inflation.
To learn more about different types of investment risk (e.g. inflation, liquidity, financial loss etc.) refer to your Investment Guide.
With investing, you have to give something to get something. This is called the risk and return trade-off.
Investments that give you higher returns also tend to be riskier over the short term. Time [and diversification] is often the answer to this volatility. Investments that carry less risk usually provide more stable returns. However, they may not perform strongly enough for you to save as much as you need for the future and may not outpace inflation.
Different investments come with different levels of risk. It comes down to choosing the investments that align with your goals.
Diversification means spreading your money across different asset classes, securities and locations [so that not all your eggs are in one basket] in order to help you ride out the ups and downs of financial markets.
Inflation is the price increase of goods and services in the economy. It’s usually measured by movements in the Consumer Price Index (CPI). Increases in inflation erode the purchasing power of money – meaning it costs more to buy the same thing than it used to. By the time you retire, for example, your day-to-day living costs generally will be higher than they are today. CareSuper’s investment options have objectives that include matching or exceeding CPI, so your investment continues to hold its real value.
The Standard Risk Measure (SRM) helps you compare investment options by the expected number of negative annual returns over any 20-year period:
|Risk Band||Risk Label||Estimated number of negative annual returns over any 20 year period|
|1||Very Low||Less than 0.5|
|2||Low||0.5 to less than 1|
|3||Low to medium||1 to less than 2|
|4||Medium||2 to less than 3|
|5||Medium to high||3 to less than 4|
|6||High||4 to less than 6|
|7||Very high||6 or greater|
But keep in mind that the SRM is only one measure of investment risk. For example, it doesn't show the potential size of a negative return or take into account fees or tax (if any).
We review the SRM for our investment options regularly and update them if there’s a material change to their underlying risk and return characteristics.
If you need help deciding which options are right for you, and the level of risk and potential loss you’re comfortable with, you can talk to one of our financial planners over the phone at no extra cost. (Excludes advice on the Direct Investment Option.)
We don’t charge a switching fee to change your investment option. A transaction cost for buying and selling investments (known as the buy/sell spread) may apply. This fee varies between the investment options and can be found in Fees and other costs.
It’s possible you’ll need to change your investment option a few times during your lifetime, in response to changes in your personal or financial circumstances. For example, if you want to grow your super so you have higher income later, you may reorganise your investments to try and achieve this new financial goal.
Remember, super investments are about the future, so long-term thinking is key. Generally, you should avoid constantly switching options to chase short-term returns, because you risk locking in your losses and may wind up with less overall.
By making an informed decision and sticking to your choice, you’re more likely to receive higher investment returns over the long term. So, before you decide to switch, make sure you’re doing it for the right reasons.
Don’t know if you should change investments? Contact us for help.
Already put in a switch request and want to change your instructions? Call us on 1300 360 149, so we can walk you through the process. You cannot cancel an investment switch through your online account.
The date your requested change becomes effective will depend on when we receive it. Online change requests received by midnight (AET) on a business day and changes over the phone received by 8pm (AET) on a business day are usually processed using the unit price effective at close of markets the following business day. A ‘business day’ is defined as Monday to Friday excluding national public holidays.
Switch requests received on weekends or national public holidays will be regarded as being received on the next business day and will receive the unit price for the business day following. For example, if we receive a switch request on Saturday the unit price effective Tuesday will usually apply).
Your investment switch will generally be visible on MemberOnline within three business days after we receive your request.
We believe that true sustainable investing is a long-term investment approach that takes into account the environmental, social and governance (ESG) factors of the companies we invest in. For more information, visit responsible investing.
Divesting doesn’t take into account the complexity of environmental, social and governance (ESG) issues, for which solutions are often difficult and uncertain. Instead, we believe actively engaging with companies about ESG factors, and having our investment managers consider these issues as they arise on a case by case basis, can lead to positive change. If we divested, we would lose the opportunity to be a force for this change.
Yes, we have adopted a policy to exclude tobacco manufacturers from all global and Australian share portfolios and most other investments.
We believe tobacco warrants special consideration as there is no safe level of consumption.
CareSuper's definition of controversial weapons includes landmines, cluster munitions, chemical and biological weapons, depleted uranium weapons and nuclear weapons.
We consider environmental, social and governance (ESG) factors for every investment option, because we believe making sustainable choices ultimately benefits everyone.
The Australian and Overseas shares in the Sustainable Balanced option are looked after by specialist ESG managers who apply an ESG ‘filter’ to their decision-making.
With our Direct Investment Option (DIO), you can choose your own investments in the S&P/ASX 300, ETFs and term deposits to suit your investment needs.
We’ve created and follow a Responsible Investing Policy. This outlines how we manage environmental, social and governance (ESG) risks, including climate change.
We integrate these risks into our investment process across all 12 Managed and Asset Class options. We also require our investment managers to do the same when they’re selecting new investments or reviewing existing ones.
We also collaborate with some organisations to use our influence as a force for positive change. You can read more about this under Responsible investing.
The DIO gives you choice and control over your super investing. Choose from ASX300 shares, ETFs, Listed Investment Companies (LICs) and term deposits using our online trading platform. The DIO can be combined with any other CareSuper option.
You’ll need to register for the DIO to open a cash transaction account, which works like an online bank account. You then transfer money from your other CareSuper investment options into this account and use your super to invest.
You can also do the reverse and transfer money from this transaction account back into your other CareSuper investment options.
A monthly administration fee and brokerage fees apply. You can find out more about the fees for investing in the DIO on our Fees page.
You can invest in the DIO if you:
- Are a super member or full pension member
- Have at least $10,000 in your CareSuper account
- Have at least $3,000 invested in your other CareSuper investment options
- Maintain a minimum balance of $500 in your cash account.
Easy – simply log in to your CareSuper account and select the DIO link from the ‘Investments’ tab. Then follow the prompts.
Once you’ve registered, we’ll email you instructions on how to access your account.
If you haven’t set up your online account yet, you’ll need to register with your email address.
A corporate action is an action taken by a publicly listed company relating to its securities. Often, corporate actions provide investors with different options, so each investor can elect the option they believe is best suited to their personal circumstances (an ‘elective’ corporate action). Other corporate actions simply occur (these are called ‘mandatory’ corporate actions).
When a listed security you hold through the DIO is affected by a corporate action, CareSuper reviews the action and sends you an email detailing any corporate action that you can elect to participate in. An example is share buybacks.
Corporate actions such as voting at Annual General and Extraordinary Meetings are not available through the DIO.
The DIO works a bit differently to our Managed and Asset Class investment options. The returns credited to these options are net of any tax, meaning an allowance for tax has already been made.
With the DIO, each trade will incur either a capital gain or loss that could result in a tax liability. To find out how tax is applied to the DIO, you’ll need to read the Investment Guide.
Since investment returns for your CareSuper pension are tax-free, no tax applies to any investments you hold in the DIO. So you won’t incur a tax liability or credit for any tax on earnings, interest or any other income, capital gains or losses, and foreign tax offsets won’t apply. You will receive the benefit of franking credits. Please read the CareSuper Pension Guide PDS for more information.
Yes, you can directly transfer your existing DIO investments from your CareSuper account when you start a CareSuper pension. So, there’s no need to sell your DIO investments and buy them again.
To transfer your DIO investments, you’ll need to complete the application form in the Pension Guide PDS. We’ll process your transfer as part of your new account set-up.
(Keep in mind, you can’t have more than 80% of your pension investments in the DIO. Read the Pension Guide PDS for all terms and conditions.)
No. Unit prices do not apply to the DIO. This is because the value of these investments is determined by the market price of any listed securities and/or the amount held in any term deposit less any adjustments for fees, taxes etc.
Unit pricing is generally considered best practice in the financial services industry when it comes to calculating account balances. We use it to calculate your balance and to allocate investment returns in our Managed and Asset class investment options.
When you invest in one of our Managed or Asset class investment options, your money is placed in a pool of assets, along with the money of other members who’ve invested in that option. The investment pool for each option is broken up into units, and every unit you hold represents your share of the investment option. Those units have a value (or ‘price’), which we calculate by dividing the total value of the assets and liabilities in the option by the number of units on issue. At CareSuper we refer to this price as the ‘mid price’.
The value of your investment in a particular option is the number of units you hold in that option, multiplied by the sell price of the unit.
For example, if you invest $100 in the Balanced option when it has a buy price for units of $10, you will receive 10 units. If when you’re ready to leave the option it has a sell price for units of $20, your 10 units will be worth $200. The growth is your positive return.
Similarly, if you invest $100 in Australian Shares when it has a buy price for units of $10, you will receive 10 units. If the sell price for units drops to $8, your investment is now worth $80. This is called a negative return.
Every time you invest money in an option (e.g. by contributing to your super or switching into an investment option), you buy units at the buy price for that option. When you leave an option (e.g. by withdrawing money from your super or switching out of an option), you sell units at the sell price for that option.
A buy–sell spread represents the estimated transaction costs incurred when buying or selling the underlying assets in an investment option. Buy-sell spreads are applied to the mid-price to determine the buy price and the sell price. These spreads are applied to ensure that all transaction costs incurred by issuing or redeeming units of the option are fairly allocated to those members who transact in that option.
The mid price for an investment option is the net market value of the option (net of applicable fees, indirect costs and investment taxes) divided by the total number of units in that option.
It’s essentially an option’s unit price before the buy–sell spreads for that option have been applied to determine the buy price and the sell price.
New unit prices for each investment option are calculated each business day (Monday to Friday excluding public holidays) and are published on our website within two business days.
We have an additional unit price on 30 June each year. This is to ensure we’ve properly valued and reconciled your account at the end of each financial year using the most recent market valuations. This date might be different to the most recent unit price date that is used in FYTD calculations.
Unit prices apply to all of CareSuper’s investment options, except the Direct Investment option.
The main reason why the unit prices for the super and transition to retirement options are different from the pension options is because of their different tax treatment. A super or transition to retirement account pays tax on investment earnings (which impacts its unit price) but a CareSuper pension account doesn’t.
While we have established procedures to reduce the risk of unit pricing errors, they can still occur (e.g. if a valuation from an investment manager is incorrect).
If there is a unit pricing error and you have been materially disadvantaged, we would add the extra units to your account balance to make up any loss.
This option invests in a mix of cash and money-market securities, including at call and term deposits, bank bills, negotiable certificates of deposit, short-dated and floating rate securities issued by Australian and overseas government, banks and companies.
To achieve returns after tax and fees, at least in line with the inflation rate (as measured by CPI) each year over rolling 10-year periods. It aims to outperform the return of the Australian cash market as measured by the Bloomberg AusBond bank Bill index.
The level of market interest rates is the main driver of returns for the Cash investment option. These market interest rates are derived from the official cash rate set by the Reserve Bank of Australia (RBA). Higher interest rates would lead to higher returns, and lower interest rates resulting in lower returns.
Very low. The likelihood of a negative annual return is nil in every 20 years, but in low interest rate environments, market events could lead to a situation in which interest rates go below zero. As at 2021, the Governor of the RBA has stated publicly that this is unlikely to happen in Australia, but it has occurred in some overseas markets.
The RBA cut its official cash rate to a record low of 0.10% in November 2020. Given this low interest rate setting, returns for our Cash option are expected to move lower. While we expect the investment return for the Cash option to be positive, there is the real possibility that you could see a reduction in your super account balance after all fees and costs are deducted.
There is also a very high risk that investing solely in the Cash option now could result in your super savings not being able to keep up with rising prices.
Returns for the pension Cash option are slightly higher as pension members don’t pay tax on investment earnings.
The Cash option is designed to preserve your capital and provide stable returns rather than to grow your super. This option may be suitable for those who are looking to invest their money for one year or less. As an asset class, cash may also continue to serve a purpose in super. Combined with other investments, cash provides liquidity, income, reduced volatility, and diversification to an investment portfolio.
You can log in to your CareSuper account to see how your super’s invested.
CareSuper offers a number of options for you to choose from. Investing in a mix of the five different Asset class options or in one of our Managed options will help to reduce the risk associated with investing in a single asset class. You can learn more about our investment options by reading the Investment Guide or Pension PDS Guide.
You can also discuss your goals with one of our financial advisers to determine the best option to meet your outcomes. If you would like to book an appointment with one of our financial planners visit caresuper.com.au/advice or call us on 1300 360 149.
CareSuper and our investment managers proactively exited our Russian stock holdings, enabling us to largely complete this process before the tensions between Russia and Ukraine exploded into war.
As events unfolded, our proactive response has meant that the vast majority of our Russian exposure has already been sold. As at today’s date, we’re left with a very minimal indirect residual holding in two Russian stocks. This holding equates to less than 0.001% of our overall assets.
Despite our remaining residual holding, our aim to exit all Russian exposure has been largely successful.
Trading in Russian securities is now largely blocked due to global events and sanctions, which has created difficulties for many investors left holding securities.
The current situation in Ukraine is concerning from the point of view of human suffering and our thoughts are with those affected by the war at this uncertain time.
The conflict and uncertainty has also increased share market volatility and resulted in falls to equity markets, particularly within Overseas Shares. We’ve also seen a move towards “safe haven” or defensive assets, with bond yields falling as a result (that is, the value of fixed interest or bonds has gone up).
Investors are assessing the impact of the conflict on global economic growth and inflation. Inflation may increase further due to the ongoing impact of Russian sanctions, resulting in rising commodity prices. We expect oil and gas to be particularly affected, as Russia is one of the largest producers of crude oil.
Some members have asked us if share markets will fall further. It is not clear that this will occur as investors have, to an extent already adjusted share prices for the key implications of the conflict. It is, however, possible that we could see further share market declines as the situation is highly uncertain. Escalating sanctions and the potential selling of nervous investors could push share markets lower.
Members should be assured that we are cautiously positioned and closely monitoring events as they unfold. We remain confident that we have the right team and investment philosophy in place to manage investment during market event and market cycles such as this.
We’ll continue to focus on delivering long-term superior investment performance for our members.
We continue to monitor our portfolio and markets closely, assessing the outlook and managing investment strategy, which may include taking advantage of opportunities across various asset classes.
But more importantly, our investment philosophy that guides the way we invest your money, prepares us for scenarios like this. We are well placed to navigate the current market volatility. Our investment strategy is designed to:
- Focus on the long-term
- Actively invest for growth but also protect against downside risk
- Diversify our investments to manage risks.
Read more about our investment philosophy.
In times of market volatility it’s important not to panic or try to time the market. You may be tempted to switch your investments to a ‘safe’ option such as Cash, but this can result in a poor financial outcome in the long run.
It’s not unusual to see market cycles including periods of strong returns, followed by periods of more moderate, and sometimes even negative returns. This is because markets are continually changing. Events affecting markets may not continue, cycles change, and investor sentiment can move from negative to positive (and vice versa) quite quickly. As the Covid-19 pandemic has shown us, markets can fluctuate (go up and down) considerably, so reacting to short-term market movements could have a negative impact to your long-term savings.
It’s important to put these recent market movements in the context of your long-term investment objectives and goals.
As with any long-term investment, how market volatility affects your super largely depends on which investment options you’re invested in and when you intend to access your super.
Most investment options may see some short-term affects. Generally, those options with a higher allocation to shares will be more adversely affected than those with lower allocations, just as these options benefited from continuously rising share markets over the past 12 years.
Keep in mind our Managed investment options – including the Balanced (MySuper) option (which the majority of our members are invested in), are well-diversified across different asset classes. Diversification means there are a number of sources of return – not just shares.
We appreciate that events like these can be unsettling, and that everyone’s situation is different. If you’re concerned about the recent share market volatility, remember you have access to super-related advice as part of your membership.^ You can call us on 1300 360 149 or book a call-back today.
^ Financial advice obtained over the phone, or through MemberOnline, is provided by Mercer Financial Advice (Australia) Pty Ltd (MFAAPL) ABN 76 153 168 293, Australian Financial Services Licence #411766.
They can provide you with over the phone advice at no extra cost to help you consider the appropriateness of your investment strategy. As always, we have information available for you to consider the suitability of your investment choice and your long term goals.
Financial liquidity refers to how easily and quickly an investment can be converted to cash and still maintain its value.
Assets like shares and bonds are very liquid since they can usually be sold and converted to cash fairly quickly. On the other hand, assets like property and infrastructure are less liquid because they tend to take longer to sell (i.e. to liquidate).
At CareSuper, we believe that a combination of liquid and illiquid assets is important for a diversified investment program.
All of our Managed options invest in liquid assets, including cash and assets traded on public markets (such as listed shares and fixed interest securities). In recent weeks, around two thirds of the assets in our Balanced option are classed as liquid assets, because they can be converted to cash within 30 days. Most of our members have all or part of their super invested in the Balanced option.
Around one third of the Balanced option’s investment portfolio is held in illiquid assets. These comprise mostly our unlisted assets such as direct property (e.g. office buildings and shopping centres), infrastructure (toll roads, airports and ports) and our private equity (investments in private companies not listed on a stock exchange).These types of investments tend to perform differently in different market conditions and are an important part of how we diversify our investments to reduce the impact of volatility in share markets.
These illiquid assets have contributed to our strong long-term historical returns for members.^ You can learn more about our investments in our Investment Guide.
^Past performance is not an indicator of future performance.
Liquidity risk describes the possibility that an entity may not be able to convert an asset into cash quickly and meet its short-term financial obligations without losing value in the process.
Managing our liquidity risk is a key part of our investment program and is outlined in our Liquidity Policy which is approved by the Board and implemented by our Investments team. Our approach to managing liquidity risk is in line with the relevant superannuation laws including the requirements set by the Australian Prudential Regulation Authority (APRA).
Under these requirements, we must ensure we have enough cashflow at all times. This includes ensuring we have enough liquidity at extreme times such as the global financial crisis and the COVID-19 pandemic.
How do we do this? Our approach to managing liquidity risk involves:
- Explicitly considering liquidity when setting and reviewing asset allocations for each option
- Monitoring key indicators of changes in investment markets and/or cash flows
- Regularly ‘stress-testing’ our investment portfolio against a range of various scenarios to ensure we’re protecting our members’ assets and to determine whether we need to adjust our portfolios.
- Maintaining a liquidity action plan for managing liquidity events.
This option invests in unlisted property portfolios and has zero holdings in listed property investments (such as REITs). Our unlisted property portfolios focus on core, high-quality properties across a diverse range of sectors – mainly CBD office buildings, shopping centres, and some industrial sites. You can view the top holdings for the Direct Property option here, and the investment managers for the Direct Property holdings here
Returns on property investments come from both rental income and changes in the capital value of the properties over time. Our property managers are able to enhance returns through actively managing property portfolios (e.g. by securing rental growth, or by refurbishing and re-positioning properties). One of the key skills of our property managers is achieving effective diversity within each portfolio to balance exposures and position each portfolio for the future.
Like most investments, the value of property can rise and fall depending on prevailing market conditions.
* Past performance is not a reliable indicator of future performance.
Our Fixed Interest option currently comprises 35% cash and 65% fixed interest securities (also known as bonds).
Fixed interest investments can be a loan to a government or company where the interest rate is set in advance and the principal is paid back at maturity. Most of the fixed interest securities that CareSuper invests in are Government bonds.
Returns from bonds are generated from two key components:
- The interest received, and
- The capital movement (or price change) of the bond.
The interest rate is set when the bond is issued, and it is a fixed rate. This is where the term ‘fixed interest’ comes from.
Importantly, it is the value of the regular interest payments that is ‘fixed’ and not the market value of the security as a whole. For example, a $100 investment in a bond with a 3% interest rate would pay $3 dollars in interest per year. If the price of the bond does not change, the return on the investment in the bond would be 3% per year
Yes. Many of our members are aware that the value of shares and other assets can go up and down in the short term but may not realise that this can also occur with bonds (usually to a lesser extent than shares).
Even though the fixed interest asset class can provide more predictable investment returns and be less volatile than shares (and other growth assets), this option may still deliver low or negative returns over certain periods.
Like shares, fixed interest investments can be actively traded and have the potential for both positive and negative returns.
Investing in the Fixed Interest option is quite different to putting money into a term deposit or in cash. There is not a set rate of return on the Fixed Interest option.
Some of the main factors that affect bond prices include changes in prevailing/market interest rates and interest rate expectations.
A bond’s price always moves in the opposite direction to interest rates, so a higher interest rate (or yield) usually causes a fall in bond prices. Generally, bonds do not deliver negative returns very frequently, so many investors are not aware that this is possible.
The key to understanding this critical feature of the bond market is to recognise that a bond’s price reflects the value of the income that it provides through its regular interest payments. When prevailing interest rates fall — notably rates on Government bonds — older bonds of all types become more valuable because they were sold in a higher interest rate environment and are therefore paying a higher regular interest payment than a bond issued today.
Investors holding older bonds can then charge a ‘premium’, selling them at a higher price in the open market. On the other hand, if interest rates rise, older bonds may become less valuable because their interest payments are relatively low compared to bonds issued today. This means that the older bonds are therefore likely to trade at a discount, which could lead to negative capital returns. When the decrease in price (capital value) is greater than the interest payment, the bond’s total return is negative.
Familiarise yourself with the investment option’s risk level, return objective, investment timeframe and likelihood of a negative return. You can find this information on our website or by watching this video.
If you need advice, get in contact with a financial planner* to ensure the appropriateness of your investment strategy. This is a benefit of membership, so you don’t need to pay anything extra for this information.
*Financial advice obtained over the phone, or through MemberOnline, is provided by Mercer Financial Advice (Australia) Pty Ltd (MFAAPL) ABN 76 153 168 293, Australian Financial Services Licence #411766