STC has completed its annual review of the investment strategy for the Pooled Fund, and has made the following changes, effective from 1 July 2015.
The changes outlined below have been introduced to enhance and protect the strategies and will not affect the overall risk and return profiles of each of the strategies.
Change to the return objective for the Cash Strategy
STC has revised the return objective for the Cash Strategy, from CPI + 0.25% p.a. over rolling three-year periods to CPI p.a. over rolling three-year periods. This change reflects official cash rates being in line with expected inflation levels, and STC's view that the expected return for the asset class as a result of global monetary policies easing. Therefore the Cash Strategy is expected to be lower than historically experienced.
Overweights International equities relative to Australian equities
With the end of the super commodity cycle, the Australian economy is facing structural issues which may result in fewer opportunities in the Australian market. This is in contrast to other countries where the prospect for stronger economy enhanced. A higher index concentration relative to other countries also diminishes the benefit of diversification. As such, Australian Equities have been given a lower weighting relative to International Equities. The strategic asset allocation towards Liquid Growth as a whole has also reduced marginally for the Growth Strategy to reflect a more benign view on the global economy.
Minor changes to Liquid Defensive ranges for the Growth and Conservative Strategies
Dynamic asset allocation ranges for most asset classes were maintained across all strategies with the exception of a slight broadening of the range for the Liquid Defensive category in the Growth and Conservative Strategies. There is also slight broadening of the range for the Liquid Growth category in the Conservative strategies. There were no changes made to the ranges for the Balanced Strategy. The new ranges provide flexibility to STC to increase allocation to both Australian and International Fixed Interest within the Liquid Defensive category. STC envisage using this flexibility (if interest rates normalise), to protect performance if the growth environment deteriorates.
The dynamic asset allocations for the Growth, Balanced and Conservative Strategies can vary within the bands below.
| Strategy | Asset Class | ||
|---|---|---|---|
| Liquid Growth | Alternatives | Liquid Defensive | |
Growth | 34.0%–66.0% | 26.0%–42.0% | 10.0%–32.0% |
Balanced | 28.0%–48.0% | 17.5%–33.5% | 26.5%–46.5% |
Conservative | 12.0%–28.0% | 12.0%–28.0% | 52.0%–68.0% |
More information
SASS Fact Sheet 15 Choosing an Investment Strategy contains more information about the investment options available to members.
If you have any questions or would like more information about these changes, please contact a State Super Financial Services (SSFS) financial planner on 1800 620 305.