Changes to Cbus' Investment Options
Each year, Cbus reviews the objectives and strategies of the investment options our members can invest their accounts in. As a result of the 2019 review, we are making the following changes in 2020, which reflect a lower return environment:
- Altering the investment objectives for some of our options from 1 February 2020. This includes a small change in the likelihood of negative returns for some of our diversified investment options.
- Introducing new asset classes.
- Modifying the strategic asset allocations for the diversified options.
The changes listed above are discussed briefly in the sections below.
Investment Objective Changes
The table below shows the changes to the investment objectives for the investment options. They involve:
- A slight reduction in the investment return objective for some options.
- A small increase in the expected years of negative returns expected over 20 years.
Two new asset classes
To broaden the range of investment opportunities Cbus can use to maximise member returns, two new asset classes are being created that will replace two existing asset classes. Effective 1 March 2020, the Alternative Growth and the Mid-Risk Alternatives asset classes replace the Absolute Return and the Alternative Debt asset classes.
Changes to the Strategic Asset Allocation
Cbus has made some changes to the strategic asset allocation (SAA) for our diversified investment options. These will be progressively implemented in 2020. Changes include the new asset classes, as well as aiming to better position our diversified investment options with historically low interest rates where it will be challenging to achieve returns from cash and fixed interest assets.
The changes for the Growth (Cbus MySuper) option are:
- Replacement of the Absolute Return and Alternative Debt asset classes with two new asset classes, Alternative Growth and Mid-Risk Alternatives.
- Reduction in the allocation to fixed interest assets from 12% to 8%.
- Increased allocation to Infrastructure assets from 11% to 13%.
- Increase in the total exposure to growth assets* from 70% to 72.5%.
After a decade of delivering positive returns for members, we believe the new asset allocation mix will help allow Cbus to continue delivering favourable outcomes for members over the long term.
* Growth assets include 100% of Australian shares, global shares, emerging market shares, private equity and alternative growth (previously absolute return strategies) and 50% of infrastructure, property and mid-risk alternatives (previously alternative debt). Defensive assets include 100% of cash and fixed interest, 50% of infrastructure, property and mid-risk alternatives (previously alternative debt).