Changes to HESTA's investment options from 1 November 2010
HESTA regularly reviews its investment strategy in striving for the best possible member outcomes. Accordingly, on 1 November 2010 the following changes took effect.
Investment options closed
The Overseas Share Pool, Australian Share Pool and Absolute Return Strategies options have been closed.
Investment options re-named
Cash Plus has been re-named Conservative Pool, and Fixed Interest has been re-named Global Bonds.
HESTA's four Ready-Made Investment Pools allow you to invest in areas that interest you, while leaving key investment decisions to a team of expert managers. Each pool is made up of one or more asset classes, creating its own set of objectives and risk expected return profile. You can mix and match these in any combination, or add one or more Your Choice Asset Classes. Compare your investment options using HESTA's investment comparator.
Conservative Pool (formerly Cash Plus)
Conservative Pool aims for the lowest year-to-year variation in returns of all HESTA's Ready-Made Investment Pools, although with the expectation of lower rates of return than Core Pool over the long term. It is the most conservative of all HESTA's pools and is specifically designed to offer a low-risk investment. It aims to provide stable returns slightly greater than those achieved by investing in cash alone.
It has an asset allocation with more exposure to cash and fixed-interest markets than other Ready-Made Investment Pools. Almost 30% of its investment is in shares. This is because shares tend to have a low correlation, or relationship, with cash and bonds and as one rises in value, the others may be expected to fall. By investing a proportion in shares, we help reduce the risk while enhancing the potential return over the longer term. Cash Plus aims to achieve CPI + 3%.
Core Pool
(Unless you have already chosen another investment option, your money is automatically invested in Core Pool.)
Core Pool aims to optimise returns while in the short term achieving consistently better returns than the 90-day bank bill rate (adjusted for tax) and rarely having an interest rate less then zero. It uses the strategy of investing in a diversified but balanced mix of assets to provide a consistent return. The asset mix may vary during the year in accordance with market conditions to help achieve this consistency of return. It's the only pool that holds a reserve, which may be used for rounding purposes. These reserves are targeted to be at least 0.2% of total assets. Core Pool aims to achieve CPI + 4%.
Shares Plus
Shares Plus aims to provide higher long-term returns than Core Pool. This recognises there is likely to be substantial year-to-year variation in returns and even in the longer term, Shares Plus may not outperform other pools. It's a diversified option that includes assets other than shares, with more exposure to the share market than Core Pool. However, its diversification means that it has a lower risk profile than an investment in shares alone. Shares Plus aims to achieve CPI +5%.
Eco Pool
Eco Pool aims to optimise long-term returns, while investing in companies and property that demonstrate best practice environmental and sustainability performance relative to their competitors. Its high allocation to shares means there is likely to be significant year-to-year variation in returns, and although we expect long term returns similar to Core Pool, it may not outperform other pools (even in the longer term).
Eco Pool invests in Australian shares, international shares, Australian direct property and cash. The Australian shares and international shares component is assessed according to financial, environmental, social and governance criteria. Companies are evaluated for their environmental, social and governance performance within their sector. After being assessed for their financial performance, investments are made in the best-rated companies in each sector. The property investment has a rating of 4 green stars under the Green Building Council Australia's guidelines and has a NABERS Energy Base rating of 4.5 stars. It is considered a defensive asset. Eco Pool aims to achieve CPI + 4%..