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Welcome to the latest edition of Your Financial Future.
In this issue, we look at how investment decisions are made at EISS and how fund managers are selected. We discuss how matching your investment strategy with your risk tolerance can help you sleep better at night. We also profile Errol Umar, the new Client Relations and Advice Manager at FuturePlus Financial Services in the Sydney office and remind you about the benefits of the Government's Co-contributions scheme.
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In addition, we outline how you as a member of this Scheme have access to one of the most competitive home loans on the market.
As usual, we include an offer from the Fair Go Member Benefits program and update you on how the different asset classes and investment markets have performed in the past quarter.
Michael Block |
How do we make our investment decisions?
By Michael Block, General Manager of Investments
In response to a number of enquiries from members, I thought I'd take the opportunity to briefly explain how investment decisions are made at the Energy Industries Superannuation Scheme (EISS).
EISS is responsible for the management of more than $2.7 billion in assets and it is the Board of Trustees who ultimately makes all the investment decisions. The Trustee decides:
- What investment options should be available to members to choose from
- What the risk/return objectives are for each investment option
- The asset allocation most likely to achieve these objectives (i.e. the proportion each option should hold in assets such as shares, property, fixed interest, cash etc)
- Which are the best investment managers for each asset class (see next section below).
The Trustee does vary the asset allocation slightly to take into account short-term considerations, but it does not make
substantial changes to the structure of the investment strategies in response to short-term events. If you are in the
Diversified strategy for example, you can expect a relatively high exposure to equities. In other words, your super is
invested in exactly the way the strategy states it will be invested. If you are unsure of the objectives and risks associated
with each investment option you can view all the investment strategy descriptions within the appropriate
Product Disclosure Statement.
If, for any reason, you feel that the investment option you are invested in is not appropriate for your circumstances, you may wish to consider making a change. As always, however, you should seek the advice of a financial planner before doing so.
While there are many reasons for switching your investment strategy trying to time the market shouldn't be one of them. Trying to pick market highs and lows can confound even the most experienced investor and if you get it wrong the results can be painful.
Once we have finalised our asset allocations, we employ specialist fund managers within each asset class.
When we select a fund manager there are a range of factors which we consider and these generally include:
- People, reputation and resources
- Expertise in particular sectors of the market
- Investment style
- Performance
- Fees
For some asset classes (e.g. cash) we only employ one fund manager. For others such as Australian shares we employ a number of fund managers to reduce the risk of us underperforming the overall market.
We regularly review our fund managers and while we do not change them frequently, we do replace them if they do not continue to satisfy our requirements. For example, we may replace a fund manager if they fail one or more of our general selection criteria, or if we change our investment strategy and require a fund manager with a different investment style.
The global financial crisis has been a reminder that investing can be a risky business.
All investments come with some degree of risk. Growth assets, such as shares and property, generally have the potential to earn higher returns but also have a higher risk of declining in value over the short-term. Defensive assets, like cash and fixed interest, have a lower chance of capital loss but generally earn a lower return.
Each person has a different ability to stomach the risks of losing money in exchange for the chance of making money. This is called their risk tolerance and it is experienced in two ways. One is how much they can afford to lose without it affecting their lifestyle or ability to reach their financial goals. The second is how much they can lose before they start feeling stressed or suffer sleepless nights.
Some people are very cautious and are willing to accept low to moderate growth in their investments if it reduces the chances of losing money. Some are more aggressive and will tolerate larger losses in the short term in order to achieve the highest possible return over the long term. Others fall somewhere in between.
So, it's not only important for your financial planner to understand your specific financial circumstances and needs when they draw up an investment plan for you, they also need to know what kinds of risk you will be comfortable with. That's why consultations with a FuturePlus Financial Planner include a series of questions about your risk tolerance.
This information - combined with knowledge of your assets, liabilities and income, retirement goals and retirement timeframe - will help the planner put together an appropriate investment strategy that makes sense for your stage in life and will allow you to sleep well at night.
If you feel that your current investment strategy is out of kilter with your tolerance for risk or if your financial circumstances have changed, please call 1300 883 788 to speak to one of our financial planners, at no additional cost to yourself.
Errol Umar |
Investment markets have been through challenging times in the past and the global financial crisis (GFC) was one of those times. The key to success is to have a solid financial plan in place and to stick with it.
That's the advice from Errol Umar, who was recently promoted to Client Relations and Advice Manager, FuturePlus, in the Sydney office.
"Recent events also highlighted the fact that many people were potentially not in an investment mix which complemented their tolerance for risk. This is why it is important to seek help from a professional financial planner who will not only assist with structuring a plan, but will also be there to explain its settings should something like the global financial crisis occur in the future as well as review them as circumstances change over time " he says.
Errol has worked at FuturePlus Financial Services for the past nine years, most recently as a senior financial planner. In 2009 he competed in the Australian Financial Review Smart Investor Masterclass for Financial Planning and he finished being ranked among the top 50 financial planners in Australia. Following his promotion, he leads a team of seven financial planners and two client relationship managers.
"I really enjoy working closely with such a group of very talented people to achieve great outcomes. It is extremely rewarding to share your thoughts and experiences with team members in a way which really promotes a positive environment," says Errol of his new role.
Before joining FuturePlus, Errol worked as a financial adviser at a major bank, but he says he now enjoys being in a not-for-profit super environment and the fact that the member truly comes first. "It is extremely satisfying to know that when members see us, we are acting in their best interests. We are on their team and want to see them achieve their financial aspirations," he says.
What upsets him most in his role is seeing some members who rely on hearsay and rumours, or who simply go off what a friend has done with their money. "It's the members' hard earned money at risk here, so it's in their best interest to do their homework and that's where a financial planner is invaluable."
With the end of the financial year fast approaching, it's a good time to think about the Government's Super Co-contribution scheme.
The scheme, whose aim is to help low and middle income earners boost their retirement savings, has been highly popular since it was introduced in July 2003.
The scheme is available to Australians who earn less than $61,920 a year. To be eligible, you must make an after-tax personal super contribution directly into your superannuation account of up to $1,000 by 30 June 2010.
If you have an annual income of $31,920 or less, the Government will match your contribution with a payment of $1 for every $1 of after-tax contributions you make up to $1,000. However, the matching amount is reduced by 3.3 cents for every dollar your total income exceeds $31,920.
If you would like to read more about the Co-contribution scheme you can do so by reading the "Make Your Super Count" brochure.
To make an additional contribution, complete the 'Optional contributions' form found at www.eisuper.com.au and send it to us with your cheque. Once you have done this, and if you meet all the eligibility criteria, the Australian Taxation Office will pay the Government's contribution directly into your super account after the end of the financial year.
Are you are thinking of upgrading or buying an investment property? With interest rates edging up, you will need to ensure that you have the best mortgage rate possible. Paying unnecessarily high rates or fees is just money down the drain that could be better spent elsewhere.
So why not take advantage of the 5 Star Chifley Home Loan? It is rated 5 Star by CANNEX, the independent financial services monitoring agency. This means our mortgage loan offers "superior value", giving you the reassurance that you are making the best possible choice!
Products awarded 5 stars by CANNEX are the best 5% of similar products available in Australia. So when you consider that there are literally hundreds of similar products around, the awards give you the reassurance of knowing that a Chifley Home Loan is a competitive solution.
There are no mortgage application fees and no monthly account keeping fees. You can make extra and lump sum repayments without any restrictions which allows you to use any extra funds to reduce interest and pay out your loan faster*.
For more information on these or any of our other competitive loans, either call us on 1800 800 002 or visit our website
www.chifley.com.
*Limitations apply to Fixed Rate products. Terms and conditions apply. The credit provider is Select Credit Union Ltd. Fees, charges and all loan details will be disclosed in the loan contract. Some charges such as valuation fees and costs charged by the lender's solicitors are payable. These charges are non-refundable should they be incurred and the loan is not proceeded with. An early repayment fee may be payable. Chifley Financial Services Limited (ABN 75 053 704 706, AFSL 231148) provides services through an agreement with Select Credit Union Ltd (ABN 20 058 538 140, AFSL 238257). Chifley Financial Services does not guarantee the obligations of Select Credit Union Ltd.
Fair Go
Member Benefits Box Office
Welcome to the Fair Go Member Benefits Box Office brought to you by SPENDLESS.
We deliver great savings on cinema, theme park and attraction tickets plus a great range of top brand name
appliances and special merchandise offers.
- Hoyts
- Village
- Greater Union
- Palace
- Reading
- Dendy
- Imax
- Moonlight
- AMC
- Independents
- Birch Carroll Coyle
- Event
- Eureka Tower
- Melbourne Aquarium
- Queensland Theme Parks
- Australian Outback Spectacular
You must pre-order your movie tickets through the Member Benefits Box Office.
Your ticket is then swapped for the movie and session at the cinema you choose.
Discounts are not given or recognised by the cinemas directly.
Purchasing your discounted movie tickets, theme park tickets and merchandise is easy.
Simply click here.
All payments are secure through the eWAY payment gateway.
Alternatively, phone your order through to the Member Benefits Box Office on (03) 9822 9966
or 1800 352 600 outside of Melbourne. Don't forget to quote "Member Benefits".
The Member Benefits Box Office is owned and operated by SPENDLESS. Any credit card purchases will state SPENDLESS on your statement, not Member Benefits.
*Prices and terms and conditions are subject to change.
Are you looking to set aside some money for a house, a holiday or perhaps for your children's education? Would you like to know more about investment options, risk and return and managed funds? Are you wondering whether you will have enough money to retire on?
You could get the answers to these questions, and more, by attending one of the free wealth creation or pre-retirement planning seminars we are running at a venue close to you. To find out more, click here or contact Member Services on 1300 369 901.
Click here for information about the latest returns.
Click here
for commentary on how investment markets performed over the March 2010 quarter.
Contact us
Energy Industries Superannuation Scheme
28 Margaret St
Sydney NSW 2000
Postal Address:
PO Box N835
Grosvenor Place
Sydney 1220
Futureplus Financial Services Pty Ltd
Ground Floor
28 Margaret Street
Sydney
Member Services
T: 1300 369 901
F: (02) 9279 4131
Financial Planning
T: 1300 883 788
This document was prepared for the exclusive use of members of the Energy Industries Superannuation Scheme. Please note that the information contained in this document is of a general nature only and does not constitute personal advice as it does not take into account your personal objectives, financial situation or needs. Any advice in this document is provided by FuturePlus Financial Services Pty Ltd (ABN 90 080 972 630) as an Australian Financial Services Licensee (AFSL 238445) on behalf of the Trustee of the Energy Industries Superannuation Scheme, Energy Industries Superannuation Scheme Pty Ltd (ABN 72 077 947 285). Energy Industries Superannuation Scheme Pty Ltd is an APRA Registrable Superannuation Entity Licensee (ABN Pool A - 22 277 243 559 and ABN Pool B - 64 322 090 181).
Members should not rely solely on this information and should consider their own personal objectives, financial situation and needs before acting on this information. Prior to making any investment decision you should obtain and consider the relevant Product Disclosure Statement (PDS) pertaining to your Scheme membership and seek professional investment advice.
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