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How will your investments shape up in the year ahead?

Superannuation  |  17/04/2018  |   4 min read

It’s nearly a year since Equip and the Rio Tinto Staff Superannuation Fund merged. Since then, teams across the organisation have been bedding down the consolidation of many aspects of the funds operations.

One of the largest areas of focus since 1 July 2017 has been ensuring that we are well positioned to maintain, and even improve upon the investment performance for members of the new and larger Equip.

Most of the benefit will be delivered through greater efficiency, which means taking out less in costs and leaving more on the table in the form of returns to members.

Remember that investment costs, fees and taxes are deducted as part of daily unit price calculations, so the investment returns published for each of our investment options are the actual returns reflected in your account balance.

The question you’re probably most interested in is: what investment benefits have we achieved out of the merger and will my investments look any different in future?

One of the foundation decisions made by the new Equip Board’s Investment Committee was that, at this time, Equip would commit to 100% active management of investments.

Without getting too technical, active management of investments involves, not just tracking investment indices (passive management), but investing in what our internal and external investment specialists and managers believe should deliver better performance for you over the long term.

Active management requires a degree of conviction about how markets, specific industry and commercial sectors, and even individual companies or property investments will perform relative to others.

It also requires careful selection and appointment of those specialists and managers who analyse and make investment recommendations to the fund. That is why we have committed substantial time over the past nine months to promote strong investment returns by ensuring that we have external managers with the right knowledge and skills.

We expect manager selection will also be a significant contributor to anticipated cost savings in investment management that we experience in the future. From more than 70 external investment management companies employed across our two previous funds, the new Equip list will eventually reduce to around 40.

The cost benefit derived is largely due to the generally larger mandates (amounts of money to invest on your behalf) we can offer to our managers.

However, our investment review has not just been about reducing costs. It has also been to ensure we have the right mix of managers to provide the investment diversification that helps reduce risk over time and that we have managers with skills in specialised areas of investment that can add value to your portfolio, like unlisted property, private equity and so on.

As you may know, the investment returns delivered by Equip and the Rio Tinto staff fund before 1 July 2017 were very similar, even over longer periods of time. So the merger has enabled both teams to bring skills, ideas and practices to the fund that have enabled us to adopt the best from both worlds.

This behind the scenes activity in investments will be reflected from 1 July 2018 in a single set of investment options for all Equip members, including those from the Rio Tinto fund. We will be contacting you soon with details of these, confirming in which of them your super is invested.

The great news is that there will be no ‘big bang’ surprises, because the Equip team has been gradually adjusting investment allocations across both sets of investment options to closely align prior to 1 July. The new investment options will simply be the final step in that process.

As always, if you have questions about your investments, you can contact the Helpline or refer to the website. To discuss setting up a personal financial plan, particularly if you’re thinking about retirement, you can call Equip Financial Planning on 1800 065 753 or request an appointment by clicking here.

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