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
  • Absolute return
  • Property
  • Infrastructure
  • Alternative debt
  • 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
Absolute return

Absolute return assets include investments that take advantage of short-term opportunities in the market. For example, providing loans to companies with viable business models that are currently experiencing funding difficulties.

 

It also includes investment in growth assets that do not fit the characteristics of shares or private equity. For example, the Cbus Art Collection.

Growth Primarily capital gains (or losses) 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 shares in a listed or unlisted property trust.

 

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,

capital gains (or losses)

Moderate to high Moderate to high
Infrastructure

Infrastructure assets are facilities that provide services needed for the functioning of a society. They are often highly regulated by governments, due to their essential nature.

 

For example, transport systems (toll roads, bridges, airports, seaports), communications systems (satellites), utilities (water supply, power distribution, sewage), and social infrastructure (hospitals, education facilities).

Defensive and growth

Dividends,

capital gains (or losses)

Moderate Moderate
Alternative debt  

Alternative debt investments are a type of fixed interest investment.

 

Cbus’ alternative debt investments are made up of bank loans, direct lending and corporate debt securities. These loans generally have lower credit ratings than investments in the fixed interest sector and as such command a higher rate of return to compensate the investor for the risk of default.

Defensive and Growth Primarily income Moderate Moderate
Fixed interest

Fixed interest investments typically involve lending money to either governments or companies.

 

Cbus' fixed interest asset class generally comprises loans to governments, government-related organisations and companies that are rated highly by credit ratings agencies

Defensive Primarily income Low to moderate Low to moderate
Cash Cash investments include bank deposits, cash management trusts and money market investments that can be converted to cash very quickly. The return of the asset class tends to be close to the cash rate set by the Reserve Bank of Australia. Defensive Interest Low Low