The super funds allocating over 85% to equities

Superannuation funds targeting younger members are holding over three-quarters of their allocation to equities, compared to less than half in standard options.

Today, Super Review wrote about how school leavers may be defaulting into balanced funds at the detriment to their long-term performance.

Instead of balanced funds, the high growth options offered an asset allocation more suitable for the long-term time horizon.

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For funds which were targeting young members, this increased further to have a significant weighting to equities and, in some cases, zero cash or fixed income allocations.

These funds included Student Super, which targeted students and young professionals, Spaceship Super which had an average member age of 31 and retail-focused REST where 63.9% of members were under the age of 34.

From looking at their factsheets, Student Super High Growth and Spaceship GrowthX held 86% and 87% respectively to equities while REST had 72%.

Student Super also had 0% cash and 0% fixed income while REST had 0% cash and 5% fixed income and Spaceship had 2% cash and 5% fixed income. However, to diversify away from equities, all three had allocations to property and Student Super and REST held infrastructure exposure.

Comparing this to the high growth options in Australia’s three-largest superannuation funds, Australian Super High Growth had 67% equities, 68% for Aware Super High Growth and just 49.4% for the QSuper Aggressive fund.

Asset allocation of high growth options:

 

Student Super

Spaceship GrowthX

REST

Equities

86%

87%

72%

Fixed income

0%

5%

0%

Property

10%

6%

10%

Infrastructure

4%

0%

10%

Cash

0%

2%

0%

Alternatives

0%

0%

3%

 

The Association of Super Funds Association (ASFA) deputy chief executive, Glen McCrea, said: “When young people are making decisions about their super they need to think about the level of risk and compare the long-term returns of funds available. For example, there is more risk with selecting 100% growth assets, however the potential return is also a lot higher.

“Risk tolerance is an important factor to consider when making choices in relation to the level of investment risk in your portfolio. Many young people are comfortable with more volatile high growth investment options because of the potential for higher long-term returns. Others may not be comfortable with this volatility.”




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