In November 2014, we introduced our Income-Focussed investment option to fill a gap in the superannuation investment market.
Where most investment options focus solely on capital growth, we wanted to create an option that would provide an income stream as well as long-term capital growth. The Income-Focussed option was designed to appeal to most investors, but particularly those who are close to retirement or already retired.
What is the Income-Focussed option?
To achieve the Income-Focussed option’s objectives of generating income and long-term capital growth, the option has a significant tilt to cash, dividend-generating listed equities, global credit and income-yielding alternatives. The Income-Focussed option has wider asset allocation ranges than traditional diversified investment options to allow for adjustments to the portfolio settings. Having flexibility helps deliver on the investment objectives while reducing the volatility of the option. For example, when shares are very expensive, their income‑generating characteristics are generally more subdued. In this instance, the portfolio settings would be moved away from shares and towards fixed income investments to achieve the stated income objectives.
Monitoring the performance of the Income-Focussed option
To help members monitor the performance of the Income-Focussed option, we introduced a secondary investment objective from 1 July 2017. This means as well as the existing income objective of RBA cash rate plus 2% per annum, there is also a total return objective of CPI (or inflation) plus 2%. This doesn’t change how the option is invested. It just gives a clearer picture of how the option is performing against its objectives of income and capital growth. This was done to emphasise that the Income-Focussed option holds a diverse range of assets and not only fixed income or bond like investments, and generates capital growth.
How has the Income-Focussed option performed?
Since its inception, the Income-Focussed option has performed strongly, delivering the following accumulation returns to 30 June 2017:
Past performance is not a reliable indicator of future performance.
Get more information
To find out more about the Income-Focussed option or our other investment options, go here