Income Stream investment options

Investment objectives

Balanced aims to produce a return of 3.5% (after-tax return of 3.0% for TTR) above CPI over the long term. Returns may vary substantially from year-to-year and this option may occasionally produce a negative return.

Type of investor this option may suit

Assertive

Strategy

Balanced invests in a diversified mix of asset classes, with 65.3% invested in growth style assets, including listed shares and the remainder invested in defensive style assets, like cash, defensive property and global debt. Infrastructure assets provide a mix of both growth and defensive characteristics. The inclusion of infrastructure should give Balanced a lower risk profile than if the growth assets were all listed shares.

Probable number of negative annual returns over 20 years

3 to less than 4

Suggested minimum investment timeframe

5 to 7 years

Investment objective

Defensive aims to produce a return of 2.0% (after-tax return of 1.5% for TTR) above CPI over the long term. Negative returns can occur, but generally occur very infrequently.

Type of investor this option may suit

Defensive

Strategy

Defensive invests in a diversified mix of asset classes, with 22.5% invested in growth style assets, like listed shares and 77.5% invested in defensive style assets, like cash, term deposits, defensive property and global debt. Infrastructure assets provide a mix of both growth and defensive characteristics. The diversification and defensive asset bias of this option means that it has a lower risk profile than Conservative, while its exposure to some growth assets should provide a small amount of protection against inflation.

Probable number of negative annual returns over 20 years

Less than 0.5

Suggested minimum investment timeframe

1 to 3 years

Investment objective

Conservative aims to produce a return of 2.5% (after-tax return of 2.0% for TTR) above CPI over the long term. There may be some year-to-year variation in returns, with negative returns occurring infrequently.

Type of investor this option may suit

Moderate

Strategy

Conservative invests in a diversified mix of asset classes, with 32.5% invested in growth style assets like listed shares, and approximately 67.5% invested in defensive style assets including cash, term deposits, defensive property and global debt. Infrastructure assets provide a mix of both growth and defensive characteristics. The diversification and defensive asset bias of this option means that it has a lower risk profile than either the Balanced or Active options, while its exposure to some growth assets should provide some protection against inflation.  

Probable number of negative annual returns over 20 years

1 to less than 2

Suggested minimum investment timeframe

3 to 5 years

Investment objective

Eco aims to produce a return of 4.0% (after-tax return of 3.5% for TTR) above CPI over the long term.

Eco aims to optimise long-term returns while investing in companies that demonstrate best practice sustainability performance within their industry sector, relative to their peers. This option may produce negative returns quite frequently due to its high allocation of listed shares.

Type of investor this option may suit

Aggressive

Strategy

Eco invests in companies with superior envitronmental, social and governance performance as assessed by our managers. Eco has investment exclusions concerning uranium, fossil fuels, tobacco and controversial weapons. Property investments are screened to ensure they meet appropriate environmental requirements. Currently, the Private Equity investments are in Cleantech.  See HESTA Product Disclosure Statement for further information.

Probable number of negative annual returns over 20 years

4 to less than 6

Suggested minimum investment timeframe

7 to 10 years

Investment objective

Active aims to produce a return of 4.5% (after-tax return of 4.0% for TTR) above CPI over the long term. This option may vary substantially year-to-year and produce a negative return quite frequently.

Type of investor this option may suit

Aggressive

Strategy

Active offers a diversified asset portfolio, investing predominantly in growth style assets like listed shares, while maintaining a balance of defensive assets like defensive property and cash. In addition, infrastructure assets are included, which provide a mix of both growth and defensive characteristics. The diversification of asset classes means this option has a lower risk profile than an investment in shares alone.

Probable number of negative annual returns over 20 years

4 to less than 6

Suggested minimum investment timeframe

7 to 10 years

Investment objective

Over the long term, to earn a return (after-tax for TTR) after investment fees and indirect costs, equivalent to or higher than the retun (net of tax## for TTR) of the Bloomberg AusBond Bank Bill Index. Cash is the most conservative of the HESTA Income Stream investment options.

Type of investor this option may suit

This option may suit an investor seeking to create their own diversified portfolio, who would like to include cash and cash products.

Strategy

Cash is primarily invested in at-call bank deposits, along with an allocation to short-term (less than 12 months) term deposits with highly rated banks. It may include a small allocation to other cash investments.

Probable number of negative annual returns over 20 years

Less than 0.5

Suggested minimum investment timeframe

<1 year

## Estimated tax rate provided by independent investment consultant.

Investment objective

Over the long term, to earn a return (after-tax for TTR) after investment fees and indirect costs, equivalent to or higher than the retun (net of tax## for TTR) of the Bloomberg AusBond Bank Bill Index. Term Deposits are more conservative than most other HESTA Income Stream investment options, with the exception of Cash.

Type of investor this option may suit

This option may suit an investor seeking to create their own diversified portfolio, who would like to include term deposits.

Strategy

The Trustee will seek to invest in a diversified range of term deposits to enable flexibility to achieve the highest rates possible while managing reinvestment risk.

Probable number of negative annual returns over 20 years

0.5 to less than 1 

Suggested minimum investment timeframe

<1 year

## Estimated tax rate provided by independent investment consultant.

Investment objective

Over the long term, to earn a return (after-tax for TTR) after investment fees and indirect costs, equivalent to or higher than CPI + 3.5% (CPI + 2.75% for TTR). Property is less conservative than Cash or Term Deposits because it has a higher possibility of producing a negative return from time to time.

Type of investor this option may suit

This option may suit an investor seeking to create their own diversified portfolio, who would like to include property.

Strategy

Property is invested primarily in unlisted property and property debt with a 15.0% holding in cash products. The primary characteristic of the unlisted property will be that rental income is expected to generate the majority of the returns, not capital growth.

Probable number of negative annual returns over 20 years

2 to less than 3

Suggested minimum investment timeframe

3 to 5 years

Investment objective

Over the long term, to earn a return (after-tax for TTR) after investment fees and indirect costs, equivalent to or higher than the retun (net of tax## for TTR) from the combination of:

• 95.0% S&P/ASX 300 Accumulation Index (adjusted for tax credits)
• 5.0% Bloomberg AusBond Bank Bill Index
  

Australian Shares aims to produce long-term returns primarily from capital gains, but carries the risk of negative returns quite frequently.

Type of investor this option may suit

This option may suit an investor seeking to create their own diversified portfolio, who would like to include Australian shares.

Strategy

Australian Shares option is invested primarily in listed Australian shares. It may at times hold a small percentage of its assets in shares of companies not listed on the Australian Stock Exchange. It may include managers who also short sell shares.

Probable number of negative annual returns over 20 years

4 to less than 6

Suggested minimum investment timeframe

7 to 10 years

## Estimated tax rate provided by independent investment consultant.

Investment objective

Over the long term, to earn a return (after-tax for TTR) after investment fees and indirect costs, equivalent to or higher than the retun (net of tax## for TTR) from the combination of:

• 73.6% MSCI World ex-Australia Index $A Net Dividends Reinvested
• 21.4% MSCI Emerging Markets Index in $A Net Dividends Reinvested
• 50/50 $A Hedged/unhedged
• 5.0% Bloomberg AusBond Bank Bill Index

International Shares aims to produce a long term return primarily from capital gains but carries the risk of producing negative returns quite frequently.

Type of investor this option may suit

This option may suit an investor seeking to create their own diversified portfolio, who would like to include international shares.

Strategy

International Shares is invested primarily in listed international shares. The currency exposures in International Shares are managed under HESTA’s active currency overlay program policy. It may include managers who also short sell shares.

Probable number of negative annual returns over 20 years

4 to less than 6

Suggested minimum investment timeframe

7 to 10 years

## Estimated tax rate provided by independent investment consultant.