Asset classes

 

Defensive or aggressive?

Your super is invested across a wide range of different investments and asset classes. These are generally divided into two groups: growth assets and defensive assets. Within each group, there are a number of different types of asset classes.

 

Growth assets generally provide relatively higher returns over the longer term with a corresponding higher level of risk (increased chance of a negative return and volatility). A high proportion of their returns are derived from capital growth. Examples include shares and some property investments.

Equities represents an ownership interest in a business, trust or partnership. Equity investments include shares and private equity.

Shares - represent part-ownership of a company through holding shares.

Private equity - involves investments in entities or vehicles that are not listed on a stock exchange. They can be based in Australia and overseas.
 

Infrastructure represents the basic physical systems of a country, state or region including transportation, communication, utilities, and public institutions. Infrastructure assets can also take the form of social infrastructure assets such as hospitals, schools and aged care facilities.

Property represents an investment in real estate where the earnings and capital value are dependent on cash flows generated by the property through sale or rental income. The investment in property could be made either directly or via property trusts.

Defensive assets generally are lower risk (less chance of a negative return), with a corresponding expectation of lower returns over the longer term. A high proportion of their returns are derived from income (cash) flows. Examples include cash, term deposits and some fixed interest investments. 

Some asset classes, such as infrastructure, property and alternatives may have growth and defensive characteristics. Where assets such as infrastructure, property and alternatives derive a high proportion of their returns from strong income (cash) flows rather than capital growth, these assets may be classified as defensive. Where they derive a high proportion of their returns from capital growth rather than income (cash) flows these assets may be classified as growth.
 

Fixed interest represents a loan, placement or debt security. Loans are financial assets that are created when a creditor lends funds directly to a debtor and are evidenced by documents that are non-negotiable. Placements are liabilities of entities not described as authorised deposit-taking institutions, e.g. State treasuries. Debt securities are securities which represent borrowed funds which must be repaid by the issuer with defined terms including the notional amount (amount borrowed), an identifiable return and maturity/renewal date.

Represents cash on hand and demand deposits, as well as cash equivalents. Cash equivalents represent short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash investments may include deposits in a bank, investments in short-term money markets and other similar investments.

Almost any non-traditional investment strategy could be classified as an alternative investment, such as hedge funds or credit investments. 

 

Learn more

 
×