Where is my super really going?

Have you ever wondered where your money actually goes when it’s in a super fund?

When this subject comes up among the Starts at 60 community, many are surprised to learn their money is being invested – at least in part – in overseas developments. This raises a common question: “why not invest in Australia?”

It turns out a great deal of our super remains at home. However, branching out into other markets can keep your money safer – and your rewards greater.

We spoke with Alistair Barker, Co-Head of Macro and Portfolio Construction at AustralianSuper, about where your super goes and why.

“There are many assets which are Australian based,” he says. “The key is to find the right balance.

“When thinking about how much we invest in Australia and other parts of the world, you have to look at the overall portfolio and how diversified that portfolio is.”

This means looking at potential investments through a huge range of lenses: is that investment exposed to interest rates? Is it exposed to inflation? Is it a short-term investment that could be sold today, or something very long-term?

For example, Australia’s share market places a lot of weight in mining stocks. This comes with a degree of risk and uncertainty.

“The Australian economy, compared to the rest of the world, is actually going okay. We’ve managed to work our way through the end of a major mining boom without going into a recession, which is a pretty good outcome.

“However, the domestic share market was quite exposed to the resources boom. So one thing we were particularly worried about was that the demand and supply for natural resources was potentially at risk falling out of balance, and this had potentially negative consequences for our domestic equity holdings.

“One of the reasons we invested more off-shore was to protect the portfolio against those risks.”

This proved a very worthwhile move. “The portfolios benefited substantially from investing off-shore, and also benefited more as the Australian dollar fell.”

When the resources boom ended, these off-shore investments were able to soften the blow.

While this might give the impression that less is being spent locally, this is far from the case. In fact, in AustralianSuper’s case, the amount of Australian investment is also on the rise.

“AustralianSuper as a fund has been growing very quickly as members continue to contribute to their super and save more,” says Alistair. “The super industry as a whole is growing quite quickly.

“So while the percentage of the overall investment has trended more towards being offshore in recent years, the actual dollar amount invested in Australia is still increasing.”

The larger the fund, the greater the chance to invest in major infrastructure. In AustralianSuper’s case, this can range from Sydney Airport to the King’s Cross redevelopment in London.

The growing number of Australian investments can also be a great benefit to the local community and economy.

When a government has privatised an asset – that is, taken it off their portfolio and moved it to private investors – the proceeds will often benefit the community.

“A good example is when we were involved in the privatisation of the Sydney Ports Corporation. The NSW state government then used a large amount of those proceeds to invest back into the community, including improvements to their road networks.

“We have invested in assets called public-private partnerships, which involves building things like schools and courthouses and hospitals. The government is looking to develop these projects, but needs funding from outside government capability in order to deliver those.”

So a diverse portfolio creates that all-important safety net against future uncertainty. AustralianSuper members can rest assured their money is being responsibly invested – both locally and abroad – toward the only outcome that matters: a better, more secure retirement.

Are you comfortable with where your super is being invested? Share your thoughts in the comments below.

 This article has been sponsored by AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788. The views expressed are those of Starts at Sixty and the interviewee, and not necessarily AustralianSuper. For more information, please visit the AustralianSuper website.