Asset classes
In simple terms, an asset is an investment used to gain a return.
Assets are divided into asset classes, such as:
- Shares (Australian, global shares and emerging market shares)
- Private equity
- Alternative growth
- Property
- Infrastructure
- Mid-risk alternatives
- Fixed interest
- Cash
Each standard Cbus investment option invests in a range of different asset types, except Cash Savings, which invests only in cash investments.
The amount allocated to each asset class largely determines the overall risk and return outcome from each investment option.
| Asset classes | Description | Asset type | Source of return | Risk level | Return potential |
|---|---|---|---|---|---|
| Shares (Australian, global shares and emerging market shares) |
A share in a company represents ownership. If you have a share in a company you are a part owner (usually referred to as a shareholder). |
Growth | Capital gains (or losses): increase (or decrease) in share price. Dividends: profits the company makes, distributed to shareholders. |
High | High |
| Private equity | Private equity investments are investments made in privately owned companies (companies that are not listed on the stock exchange). | Growth | Primarily capital gains (or losses). | High | High |
| Alternative growth | This asset class seeks to achieve returns from a range of growth investments with an emphasis on alternative strategies. It includes an allocation to invest in climate related opportunities which is aligned with our approach to responsible investment. |
Growth | Primarily capital gains (or losses) or income from investments that pay dividends and interest. | High | High |
| Property | Property investments include office, retail, residential and industrial buildings. Property investments can be made directly by buying an existing building, by developing a building, or indirectly by buying units in a pooled property fund. Cbus invests in property directly (through our wholly-owned company Cbus Property) and indirectly in unlisted property trusts. We also have a small holding in global listed property trusts. |
Defensive and growth | Rental income, rental growth and capital gains (or losses). | Moderate to high | Moderate to high |
| Infrastructure | Infrastructure assets are facilities that provide services a society needs to function. Examples include airports and seaports. Cbus invests in Australian and global infrastructure in two ways: directly by owning a stake in the company operating the asset, or indirectly through buying units in a pooled fund. |
Defensive and growth | Operating income (such as fees on toll roads) and growth income. | Moderate | Moderate |
| Mid-risk alternatives | This asset class is expected to provide moderate returns over the long-term with less volatility than shares. It mainly invests in credit, which is generally in the form of bonds, loans and other structured credit instruments issued by private and public companies. Lending to corporations may include infrastructure debt and property construction debt.
|
Defensive and growth | Primarily income. | Moderate | Moderate |
| Fixed interest | Fixed interest investments typically involve lending money to either governments or government related organisations at a fixed rate. | Defensive | Primarily interest income over the term of the loan. | Low to moderate | Low to moderate |
| Cash | Cash investments include bank deposits, cash management trusts, term deposits and short term debt securities. The return of the asset class tends to be close to the cash rate set by the Reserve Bank of Australia (after fees and tax). | Defensive | Interest. | Low | Low |