Telstra Super Pty Ltd ABN 86 007 422 522
Telstra Super Pty Ltd ABN 86 007 422 522 OCTOBER 2014 VOLUME 18 ISSUE 1
IN THIS ISSUE: Your investments, your life + Insight into our investments + Your life vs. your super investments + Portfolio profile: Australian Shares
Delve a little deeper
for super success movingforward October 2014
Insight into our investments Superannuation will be an important part of your life – helping replace your working income when you retire. Making the most of your investments is a huge part of super savings success; but how many of us pay attention to it?
Here we explore some of the basics of superannuation investment, from how it works to how Telstra Super’s investment options have performed. Remember, superannuation is a long-term investment, so it’s important to take a long-term view. Telstra Super’s investment options Our range of accumulation investment options have been designed to make your investment choice easy. Telstra Super offers five diversified options, with varying levels of risk and return: • Growth • Balanced • Diversified Income • Defensive Growth • Conservative We also offer five single asset class options; you can choose from: • International Shares • Australian Shares • Property • Fixed Interest • Cash. Additionally, our Direct Access investment option offers eligible members the ability to invest their super in term deposits and companies listed in the ASX300.
Our investment returns
Most importantly, these results help highlight the value that we provide to our members in building their retirement dreams. The graph below shows our returns per investment option, over 1, 3 and 5 years where available. Our active investment approach
We are very pleased to announce another year of strong investment returns* for our members, delivering double-digit returns for eight out of our ten investment options over the 2013/2014 financial year.
The purpose of active management is to enhance investment returns by outperforming the market, as measured by a selected benchmark or index.
In addition to this, five of our investment options ranked first in the SuperRatings Fund Crediting Rate Survey† and four of our investment options surpassed the median performance by more than 3% for the 2013/2014 financial year.
Telstra Super is a believer in active investment management. Led by our Chief Investment Officer, Jim Christensen, our investment team works alongside active managers based within Australia and around the globe who have demonstrated a successful performance record.
Telstra Super investment returns at 30 June 2014 20%
1 Year
18%
3 Years
16%
5 Years
14% 12% 10% 8% 6% 4% 2%
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Telstra Super also offers a default MySuper arrangement consisting of three investment stages for members who don’t want to make an alternative investment choice: MySuper Growth, MySuper Balanced and MySuper Conservative.
If one of our investment options does not quite fit your circumstances, or appetite for risk and return, you can select a mix of any of the options we offer. This allows you to tailor your investment strategy to your needs.
* Past performance is not a reliable indicator of future performance † SuperRatings Fund Crediting Rate Survey, June 2014. Find out more at www.superratings.com.au/ratings. Page 2
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Why active management? Active investment managers use research, forecasts and their own expertise to make independent decisions on where and how to invest. This flexibility allows them to take advantage of opportunities in the market and make changes to protect against anticipated market downturns. Our active management results Our active management approach has achieved very strong results with our Growth, Balanced and Conservative investment options all in the top 10 performing funds in their relevant SuperRatings survey group†over the 10 year period. This may mean more money for you in retirement than another investment approach might achieve. The state of the world The 2013/2014 financial year was a positive year in the investment landscape, both globally and locally. Although a series of unsettling global political events caused some concern amongst investors, the global economy remained relatively stable. Investment performance across the superannuation industry was aided by the very strong returns in the Australian and international equity markets.
How do superannuation investments work?
Step 1: Money (contributions) go into super
Step 2: Super contributions are invested
Step 3: Your investments go to work for you
Your employer makes contributions into your super through compulsory Superannuation Guarantee payments. You may also make voluntary additional contributions. A little extra now may make a big difference in retirement.
The money paid into your super account is invested in your chosen investment options. You can invest in an option that best suits your age, timeframe, financial plans, appetite for return and your tolerance for risk.
On behalf of our members, we invest in things such as shares in Australian and overseas companies, government bonds, infrastructure and term deposits, and the value of these investments generally grows over time.
Investment jargon buster Return
A performance measure used to evaluate the efficiency of an investment; basically, what you get from what you put in.
Compounding
The process of generating earnings on an asset’s reinvested earnings.
Asset class
A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations, e.g. equities.
Diversified investment options
Your money is invested across several asset classes including shares, cash, property and fixed interest.
Find out more in our Annual Report Our Annual Report summarises the year for the fund, and also has reports from our CEO, Chairman and Chief Investment Officer. Coming soon! Keep your eye on our website in the coming weeks.
October 2014
www.telstrasuper.com.au
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Your life vs. your super investments
Sometimes, the world of stock markets, investments and returns seem like such a long way away from real life, but the way your super is invested can make a big difference to your retirement income. We’ve outlined three of our diversified investment strategies you may like to consider at different times of your life. It’s important that, whatever stage of life you’re at and whatever your attitude to risk, you choose an investment approach that suits you best.
18-45 years old
45-65 years old
65 years old and over
This is the time where you find your own path through life…
Your retirement is getting closer; are you starting to look forward to a new phase of your life that doesn’t revolve around work?
Retirement is sneaking up on you and you may soon be able to access your super – have you started to think about:
• find something you want to study • do some travelling • start working • develop your career path • start a family • send your children to school • buy your first home. Growth investment option When you are a long way from retirement, you might want to consider a long-term growth strategy. This means you may choose funds such our Growth investment option, which has a higher level of risk to achieve greater returns over the longer term and is suited to investors with a higher risk tolerance. The earlier you start thinking about this, the more prepared you’ll be later.
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You may be looking at things like: • sending your children to university • increasing your savings • downsizing your home • setting your retirement income goals. Balanced investment option If you are closer to 65 or are a more cautious investor, you may think of moving your investments into lower-risk funds, such as our Balanced investment option. This is a diversified investment option with a moderate bias towards growth assets, balanced by an allocation to defensive assets. This option suits investors who are seeking growth but who wish to lessen the risk of rapid changes in value over the short term.
• watching your family grow with grandchildren • when to stop work, or at least slow down • how much income you could have in retirement • your dream retirement lifestyle • if you are eligible for any government benefits. Conservative investment option You may be starting to think about protecting your retirement savings by moving into lower-risk funds, such as our Conservative investment option; a diversified investment option with a bias towards defensive assets to minimise short term fluctuations but with some exposure to growth assets for longer term growth. This can be a suitable option for investors who want to maintain some growth with lower risk of capital loss.
5 things to consider when investing post-retirement You’ve said goodbye to your working years and are now enjoying your retirement – living the dream! The last thing you want to do is run out of money, right? So here are 5 things you should be thinking about when it comes to investing… 1. Protecting your investment Now that you’ve reached your retirement years, your focus is likely to shift towards protecting your investment and ensuring you have enough super savings to last the distance. Investing in more conservative options may still allow some room for growth, but with less potential for short-term losses. You may like to consider one of our more conservative investment options such as Defensive Growth or Term Deposits via Direct Access. Please refer to our Investment Guide for more information about the available options.
2. Beating inflation While investing conservatively might be a safer option in your retirement years, inflation is also important to keep in mind when evaluating your spending power. Keeping your savings in super may help you beat inflation over the longer term by allowing access to growth investments.
3. Accessing your super
Find out more Our Investment Guide details the Telstra Super investment options you can choose from, their objectives and potential risks, and the various ways in which we manage your investment on your behalf. It is important to make sure you consider the likely investment returns and risks and your investment timeframe when deciding which option is right for you. Go to www.telstrasuper.com.au to find out more information.
When you enter retirement, you also open up a number of options for accessing your super. While you could take your super out as a lump sum or keep it under your pillow and hope you don’t spend it all at once, keeping all or most of your super in your account can help you stretch your retirement savings further. For example, retirement income streams discussed below.
4. Retirement income streams Flexible and tax effective, retirement income streams such as Telstra Super RetireAccess® are designed to replace the regular income earned during your working life. You receive regular income payments and have the ability to choose how much and how often your income is paid (above a minimum government limit).
5. Need help? No matter your age or life stage, Telstra Super Financial Planning is here to help, offering financial advice with the aim of developing a financial strategy suited to your needs. Call Telstra Super Financial Planning today on 1300 033 166 or request an appointment at www.telstrasuper.com.au/Advice Telstra Super RetireAccess offers income streams from the Telstra Superannuation Scheme, issued by Telstra Super Pty Ltd. Before deciding whether to acquire a Telstra Super RetireAccess income stream, consider the Product Disclosure Statement available from our website or on request from 1300 033 166. Eligibility criteria apply.
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Portfolio profile: An inside look at Australian Shares Telstra Super’s Australian Shares option is designed for investors willing to accept a higher level of volatility in returns, in order to achieve a potentially higher rate of long term growth than would be offered by a multi-sector portfolio. The objective of the Australian Shares Q & A with Rob Landau option is to earn high returns over the Portfolio Manager, Telstra Super long-term through a diversified portfolio of Australian shares. As its name How would you suggests, 100% of funds are invested in describe your job Australian companies with diversification to your friends? being achieved through exposure to a I look after number of investment managers with superannuation different styles. money! My role is to Telstra Super’s Australian Equities invest in Australian portfolio is invested across a diverse Equities and do my range of stocks varying from healthcare best to pick stocks and biotech to oil and gas. that will deliver strong returns. I focus on top 100 stocks and strive to beat the performance objective (the ‘benchmark’). There is quite a lot of pressure to perform given how important long-term investment performance is to our members, however I enjoy working in such a challenging and rewarding environment. How quickly do you have to make decisions?
Additionally, there are always event specific factors such as a company announcement that may require you to act within minutes. Key challenge of your role? Reading between the lines and understanding market psychology. Sometimes what companies say and what they mean can differ markedly; listening carefully to how management phrases announcements can give you a great advantage. What two investment quotes do you like? “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.” – Warren Buffett “Most investors want to do today what they should have done yesterday” – Larry Summers
As equity prices are always changing, you are making decisions on a daily basis about when to buy or sell a stock. Page 6
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How to change your investment choices on SuperOnline
Easier direct access to term deposits and shares
You can change your investment option as often, or as little as you like, but it’s important to make sure it’s the right choice for you.
More members can now take greater control over their investment decisions, thanks to recent changes to the eligibility criteria and minimum investment values for our Direct Access investment option.
Once you are comfortable with your decision, making the switch is easy thanks to our four step online process. 1. Log in to SuperOnline at www.telstrasuper.com.au/superonline Select the ‘My investment choice’ link on the left hand side of the screen; this will show your current and future investments.
3. Choose your update type You can update your investment choice(s) using percentage allocation or dollar amounts when updating for current balance allocations. However, if you are updating your allocation for future contributions, you can only use percentage allocations. 4. Confirmation
A summary of these changes is provided below for you:
2. Click ‘Update investment choice’
Click ‘confirm’ to submit your investment choice.
Select how you would like to update your investment choice(s). You can chose to update your allocation for your:
Don’t forget: a buy/sell spread may apply when switching your investment options.
Minimum account balance to register for Direct Access
$50,000
Visit www.telstrasuper.com.au/ investments to find out more about choosing your investment option.
Minimum initial transfer to Direct Access
$10,000
Minimum term deposit investment
$2,000
• current balance, • future contributions, or • both current balance and future contributions.
These changes are designed to provide more members with the option to make specific, tailored investment decisions about their super account; should they wish to. Before you make any decisions however, do your research and consider whether this option is within the scope of your long-term investment strategy. To find out more about Direct Access, including the terms and conditions of use, eligibility criteria and current term deposit rates available, visit www.telstrasuper.com.au/directaccess
Seek financial advice While it’s great to research and improve your own knowledge of super and investments, you may like to consider obtaining financial advice to make sure you’re on the right track. To discuss your advice needs, please call Telstra Super Financial Planning on 1300 033 166.
October 2014
www.telstrasuper.com.au
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1300 033 166
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Telstra Super Member Centre Foyer, 242 Exhibition Street Melbourne VIC 3000
8.00am to 5.30pm (Melbourne time) Monday to Friday
This magazine has been prepared by Telstra Super Pty Ltd, ABN 86 007 422 522, AFSL 236709, the trustee of the Telstra Superannuation Scheme (Telstra Super), ABN 85 502 108 833. PO Box 14309 MELBOURNE VIC 8001, Telephone 1300 033 166 Š Telstra Super Pty Ltd, October 2014 The information contained in this publication is correct as at October 2014 and may change in the future. This information is general advice only and does not take into account your individual objectives, financial situation or needs. Before acting on any advice you should assess whether it is appropriate for you and consider talking to a financial adviser. Before making any decision about acquiring any product, you should obtain and review its product disclosure statement by calling 1300 033 166 or visiting www.telstrasuper.com.au. Telstra Super Pty Ltd does not recommend that any member make a decision concerning superannuation arrangements based solely on this publication. References in this document to Telstra Super Financial Planning are references to Telstra Super Financial Planning Pty Ltd (ABN 74 097 777 725). Telstra Super Financial Planning Pty Ltd is a legal entity separate to Telstra Super Pty Ltd. Telstra Super Financial Planning Pty Ltd is a licensed financial adviser (AFSL 218705) and is able to provide financial advice about Telstra Super products to members of Telstra Super. Telstra Super Pty Ltd does not endorse or accept responsibility for the information or advice provided by Telstra Super Financial Planning Pty Ltd. The investment returns from any Telstra Super product are not guaranteed. Ž is a trademark in Australia of the Telstra Corporation Limited.