Our Investment Policy is set by the Investment Committee, which is comprised of directors, in-house investment managers and external advisors. Up to 40% of the Fund's assets are managed in-house, with the balance outsourced to specialists in areas such as overseas shares, infrastructure and property. External investment managers are also used to provide members with the advantages of different management styles. Different styles enable us to identify and take advantage of diverse opportunities with the potential to enhance returns to members and to manage risk.
Some of the key policies guiding our investments are:
Representing our members
Equipsuper encourages both internal and external equities managers to vote as shareholders in those companies in which it invests according to the best interests of our members and their dependants.
Use of derivatives
Derivatives are investments with values based on other securities or assets e.g. options to buy a share at a fixed price in the future. Equipsuper permits the selective use of derivatives as part of its investment strategy. Derivatives enable us to hedge against risk by increasing or decreasing exposure to asset classes without having to buy underlying securities.
Unlisted securities and venture capital
Equipsuper has established investment limits for investments in Australian and international unlisted securities and venture capital funds. These investments cannot exceed more than 12.5% of investments within either the Australian Shares or Overseas Shares portfolios. Further, the total of these investments across both of these portfolios cannot exceed 5% of the total assets managed by Equipsuper.
Currency hedging
If you are investing in overseas markets in Australian Dollars, the value of your investment will decline if the Australian Dollar's value increases substantially against other currencies. Of course, the opposite is true if our Dollar's value declines.
To offset this risk, some super funds hedge against currency fluctuations. Generally, Equipsuper's overseas shares investments are generally partially hedged, but from time to time this may change depending on our assessment of likely currency movements.
Who are our external managers?
We carefully select and monitor our external investment managers to ensure they individually and collectively deliver long-term outperformance across major asset classes for our members. These managers are selected based on a number of criteria in addition to their historical performance, including areas of specialisation and the different management styles and expertise they can bring to our investment team:
| Managers at 30 June 2010 |
Asset classes |
| Archer Capital Pty Limited |
Growth alternatives |
| Baillie Gifford Overseas Limited |
Overseas equities |
| Brandes Investment Partners |
Overseas equities |
| Brandywine Global Investment Management |
Diversified fixed interest |
| Bridgewater Associates Incorporated |
Growth alternatives |
Campus Living Funds Management
(Transfield Holdings) |
Defensive alternatives |
| Capital International |
Overseas equities |
CB Richard Ellis Global Real Estate
Securities, LLC |
Property |
| Charterhall Funds Management |
Property |
| Colonial First State Investment Limited |
Overseas equities, property, growth alternatives |
| Concise Asset Management |
Australian equities |
| Ellerston Capital Limited |
Australian equities |
Franklin Templeton Investments
Australia Limited |
Overseas equities |
Genesis Emerging Markets
Investment Company |
Overseas equities |
Goodman Funds Management
Australia Limited |
Property |
| GPT Group |
Property |
| Hastings Funds Management Limited |
Defensive alternatives |
| Ironbridge Capital Management Pty Ltd |
Overseas equities |
| Lend Lease Real Estate Investments Limited |
Property |
| Macquarie Investment Management Limited |
Australian equities |
Macquarie Specialised Asset
Management Limited |
Growth alternatives |
| Mondrian Investment Partners Limited |
Diversified fixed interest |
| National Corporate Investment Services Limited |
Growth alternatives, defensive alternatives |
| Next Capital |
Growth alternatives |
| Northcape Capital |
Australian equities |
| Pantheon Ventures Limited |
Growth alternatives |
| Paradice Investment Management Pty Ltd |
Australian equities |
| Perennial Investment Partners |
Property |
| Principal Global Investors Limited |
Overseas equities (currency) |
| Quay Partners |
Growth alternatives |
Retirement Villages Group (Macquarie Capital
Funds & FKP Property Group) |
Growth alternatives |
| Siguler Guff & Company, LLC |
Growth alternatives |
Schroders Investment Management
Australia Limited |
Australian equities |
| Sustainable Asset Management AG (Transcap Investments Pty Ltd (sub-licensor)) |
SRI Australian equities |
Equipsuper may review and occasionally change investment managers employed on a long-term basis. Also, investment managers may be employed on a temporary basis when another fund transfers into Equipsuper. This table excludes investment managers managing less than $1 million of Equipsuper's assets.
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Investment costs
Investment fees
Equipsuper's investment fees are charged uniformly across the fund to all members. These fees are called 'Indirect Cost Ratios' , or ICRs. These fees and costs are not charged directly to member accounts. Instead, we calculate them each day as part of the daily unit pricing process for each investment option. In other words, the unit buy and sell prices we publish are net of investment fees and costs and taxes. As they are applied during the calculation of daily unit prices, they do not appear as separate items on member statements.
For more information on investment fees, please refer to an Equipsuper PDS.
Buy-sell spreads
Buy-sell spreads are essentially a user-pays fee to cover the cost of buying and selling assets in the fund. When you join the Fund or buy units in different investment options (investment switch), you purchase units at the buy price. If you receive a benefit payment, roll money out of the fund into another fund, or sell units as you move out of an investment option when you switch investments, you withdraw at the unit sell price. Your superannuation or pension account balance is based on the unit sell price.
There are different transaction costs associated with different asset classes and different investment managers. So the buy-sell spreads are different for each asset class. This also means the buy-sell spreads for the Diversified investment options vary based on the different proportions of each asset class in which they are invested. The important point is that Equipsuper does not make a "profit" from the buy-sell spreads - we pass on the transaction costs we incur. We keep the buy-sell spreads under review as the transaction costs can change over time.
For more information on buy-sell spreads, please refer to an Equipsuper PDS.
Sustainable Responsible Investment (SRI)
Equipsuper's SRI option is 100% invested in Australian equities and comprise a portfolio managed by Equipsuper based on the Australian Sustainable Asset Management (SAM) Sustainability Index (the AuSSI)*. The option utilises the AuSSI, a market capitalisation index, which is comprised of approximately 70 companies selected by SAM from a universe of approximately 200 of the largest Australian listed companies.
For more information on the criteria used for inclusion in the AuSSI, please click here.
* The AuSSI will vary over time due to a range of influences including but not limited to changes made by SAM to the Corporate Sustainability Assessment and due to other changes that Australian equity portfolios are typically subject to, such as market movements and company related events. In addition, there may be modest variations between the Equipsuper portfolio and the AuSSI due to a number of influences such as rounding and timing differences.
