LGIAsuper has reduced its exposure to property, traditional bonds and international shares while increasing its allocation to infrastructure, cash, and Australian shares in a bid to increase risk adjusted returns.
The superannuation fund said the changes took effect on 1 November and had introduced new asset class private capital to target higher-returning investments, as well as altering the mix of its alternative investments.
LGIAsuper chief investment officer, Troy Rieck, said the new allocations would provide greater transparency to members on their investments, provide more flexibility to invest, and better position members’ savings in the new investment environment.
“We are focusing on assets where we expect higher risk-adjusted returns to support our members in building their retirement balances and generating the income they need in retirement,” he said.
“Placing more emphasis on generating sustainable income from our diversified portfolios makes sense in a world when capital gains will be harder to generate.
“We are also working the assets harder, increasing the flexibility of the investment program and cutting investment fees, as every dollar we save in fees flows straight to members.”
Rieck said the reduction of property and international shares reflected market conditions and aimed to protect members from continued volatility.
He noted that the fund expected better returns from infrastructure in the coming years compared to property and would add to its portfolio over time.
“Current valuations also suggested rebalancing our share market portfolio in favour of domestic assets at the expense of our global portfolio, after a long period of being overweight in global shares,” he said.
“We keep the interests of our members at the heart of everything we do, and our focus on solid, long-term growth in a diversified portfolio enables us to respond to opportunities to ensure that our members can plan for their future in times of both prosperity and volatility.”