The changes outlined below have been introduced to enhance the strategies and will not affect the overall risk and return profiles of each of the strategies.
No changes to return objectives
The return objectives for all options remain the same as 2017-18. The following table summarises the objectives.
| 2018-19 | |
|---|---|
| Growth | CPI+3.5% |
| Balanced | CPI+2.25% |
| Conservative | CPI+1.0% |
| Cash | Cash |
| University Conservative Diversified | CPI+0.5% |
| University Cash | Cash |
| Trustee Selection | CPI+4.0% |
Strategic asset allocation changes
As part of the review, a number of minor strategic asset allocation changes have been made both within and between asset classes across the State Super Growth, Balanced, Conservative and Trustee Selection Strategies. We continue to harmonise illiquid assets across different options to enhance portfolio liquidity. These changes have been implemented by re-weighting the allocation within alternative asset classes. While we continue to maintain a constructive outlook, we are mindful with the heightened risk, these changes further improve the diversification and additional downside risk protection.
Growth, Balanced and Conservative Strategy
We have maintained the weighting to liquid growth except for the Balanced option where a modest re-weighting between Liquid Growth and Alternatives has been implemented. We also re-weight within the Alternatives by reducing weightings to (Listed) Property and Infrastructure and increased weightings to Multi-Asset to enhance the portfolio liquidity.
Furthermore, we have refined the approach to currency to take advantage of negative interest rate differentials (against United States). This further increases the defensiveness of the portfolio and provides flexibility to manage the portfolio in an environment where risk is heightened.
Trustee Selection Strategy
Trustee Selection is a defined benefit scheme with different investment time horizon to DC options. This allows Trustee Selection to benefit from additional premium by investing into less liquid assets. This is reflected in the increase in weightings to Infrastructure Investments. Additionally, we continue to include Defensive strategy to mitigate sequencing risk associated with Trustee Selection. These investments are funded by a decrease in Cash.
No changes have been made to the asset allocations for Cash and University Cash Strategies.
Dynamic asset allocation changes
Changes to the dynamic asset allocation ranges of the State Super investment strategies are limited to the Balanced, Conservative and Trustee Selection Strategies. The changes to these strategies correspond with the percentage changes made to underlying strategic asset allocations.