Robert Fowler, HESTA Executive Manager - Investments and Governance, answers your questions about HESTA's investments.
What’s happened to super in the last year?
Everyone who’s in super is an investor, and the returns on each member’s super are affected by the positive or negative changes in value of the assets they’ve chosen to invest in.
The global financial crisis, or GFC, has caused most asset prices to fall, which means that, generally speaking, super investments will show negative returns this year.
My super’s gone down again. Where’s the extra money that was paid in this year?
Your super balance includes the closing balance last year, plus this year's contributions less the government’s 15% contributions’ tax, plus or minus the change in value of the investments that you’ve made with your super.
If your balance has gone down in the last 12 months, that indicates that the value of your assets has fallen by more than your net contributions (that is, contributions you've made over the last 12 months, less contributions’ tax, fees and insurance premiums).
What can I do about the decline in my super savings?
Asset markets have always had their ups and downs, and history shows us that over time the value of investments should be recovered — and exceeded. So the best thing may be to think like a long-term investor, and stick with your current strategy, if that strategy is appropriate for your needs and risk profile.
Should I switch to a different investment?
It may make sense to switch to a different investment option if your needs or risk profile have changed. You can get an idea of your risk profile using the Risk Profiler at www.hesta.com.au/calculate, or free call 1800 813 327 to make an appointment to obtain free personal advice about superannuation.
Are you still paying fees to investment managers even though they’re losing money?
Yes. We're still paying management fees, and in some cases we've paid performance fees.
The performance fees are paid on relative performance — on the basis of how much better than the index, or comparative market return, they perform. If the fund manager performs well compared to the index, even if the return is negative, it means that members have fared better than investors in other funds.
The vast majority of our managers have delivered what we would expect in this kind of economic climate.
What’s HESTA doing to respond to the GFC?
HESTA’s taking this opportunity to reassess the existing fund managers that we use based on the new insights provided by our managers’ decisions and performance during the GFC. We’re also continuing to review our investment strategies to make sure that the Fund is well placed going forward.
Our ongoing consideration of the environmental, social and governance (ESG) issues associated with different companies and investments lets us remain confident that a company’s practices aren’t building up risks for our members that may have a significant negative impact at some point in the future.
The other good news is that the major governments around the world have recognized the problems and are doing everything in their powers to remedy them.
This information is of a general nature. It does not take into account your objectives, financial situation or specific needs so you should look at your own financial position and requirements before making a decision. You may wish to consult an adviser when doing this. Please note that investments can go up and down. Past performance is not a reliable indicator of future performance.