Asset Classes

Our investment philosophy

LGIAsuper’s aim is to preserve the investment capital of our members while providing opportunities for growth in line with each member’s risk tolerance.

Members can choose from a wide range of investment options, from highly secure to those focused on long-term growth which carry higher risk.

Those options include single asset class options, such as cash or Australian shares, or ready-made options which invest across a range of asset classes.

Asset classes explained

Traditionally, investments have been classed as either growth assets or defensive assets. Growth assets like shares and property tend to rise in value over time. Defensive assets like cash and fixed interest pay regular income.

At LGIAsuper, we believe many of the assets in our fund can have both characteristics. For example, we see property, alternatives and infrastructure as having features of both growth and defensive assets.

The combination of these growth and defensive features gives members the opportunity to grow their super in a rising market, while providing a degree of protection in poorly performing markets.

Depending on the investment option you choose, your super will be invested across a range of asset classes, including cash, fixed interest, shares, property, infrastructure and alternative investments.

Click on any of the asset classes below to learn more about them.

 

Shares

When you buy shares, also known as stocks or equities, you are buying part of a company.  Publicly listed shares are traded on stock exchanges like the Australian Securities Exchange (ASX).

When you own a share you have the right to receive part of the company’s profits, paid as dividends.

Usually, the company reinvests some of its profits back in the business, so over time the increased value of the company may result in a higher share price.

Australian shares are listed on the ASX and include companies like Westpac, Woolworths and Telstra.

International shares are companies listed on foreign stock exchanges like the New York Stock Exchange (NYSE).  International shares include companies like Apple, Toyota and Facebook.

Shares provide the potential for higher returns than other asset classes, although they carry more risk.  This is because shares are volatile, and prices can move up and down over the short to medium term.

shares

Property

Property, such as offices, shops and factories, can provide returns from both income and capital growth. Property may be listed on a stock exchange, such as listed property trusts, or owned directly.

Much of the return from property comes from rental income, although well-located property can be expected to rise in value over the longer term, providing some capital growth.

Historically, property has provided higher returns than defensive investments like fixed interest, but lower returns than shares.

property investment

Infrastructure assets

Infrastructure investments, such as roads, railways and airports, are the building blocks which keep an economy running smoothly.

They can be attractive investments as they usually have long operating lives, generate a growing stream of income, and in most cases have little competition.

The very long-term nature of most infrastructure assets means they can be less volatile than other growth assets like shares and property.

infrastructure

Alternative assets

The managers of alternative assets seek to provide returns superior to those available from traditional asset classes.

They include hedge funds, venture capital investments, private equity and private credit.

Alternative asset managers may use complex investment strategies like short selling, derivatives trading or provision of funding to start-up companies.

They generally carry higher risk than the traditional asset classes, and are often used to add diversification to a portfolio or provide a hedge against adverse market movements.

alternative assets

Fixed interest

Fixed interest investments pay regular interest and mature on a specified date. They include government and corporate bonds and debentures.

Fixed interest is normally secure if held until maturity when the full face value is payable, but there is the potential for short-term changes in value due to the movement of market interest rates.

They offer a higher level of security than shares and property, but provide a lower return over the long term.

fixed interest investments

Cash

Cash is money held on deposit with a bank or in money-market securities. Cash is highly secure and usually available at call. Returns from cash are typically lower than from other asset classes.

Returns from cash come from the interest paid on the deposit. Cash is suited to those investing for a short period of time or those seeking a very high level of security.

Over time, returns from cash may not keep pace with inflation resulting in a loss of purchasing power.

cash investments
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