VicSuper Traralgon Investment forum

Transcription

1 VicSuper Traralgon Investment forum 3 June 2014 Presented by: Michael Dundon, Chief Executive Oscar Fabian, Chief Investment Officer VicSuper Pty Ltd ABN AFSL RSE L is the Trustee of VicSuper Fund R

2 VicSuper update 3 June 2014 Presented by: Michael Dundon, Chief Executive VicSuper Pty Ltd ABN AFSL RSE L is the Trustee of VicSuper Fund R

3 What s happening at VicSuper?

4 Changes at VicSuper April 2013 VicSuper s Trustee resolves to divest from those companies producing tobacco products from the Fund s investment portfolio July 2013 VicSuper launches its MySuper product Growth (MySuper) Introduction of advice fee for certain types of advice, as required by legislation Able to accept electronic rollovers as required by SuperStream legislation

5 October 2013 Launch of new VicSuper website with improved functionality including: enhanced investment performance tracking, easier access to information and resources new calculators December 2013 Funds under management reached $12 billion

6 January 2014 Launched VicSuper mobile February 2014 Opened serviced office branches in Bairnsdale and Wonthaggi as well as Ballarat, Mildura, Shepparton, Wangaratta, Warrnambool and Wodonga July 2014 Insurance changes from 1 July 2014

7 VicSuper awarded Platinum rating VicSuper was awarded a Platinum rating for 2013 from SuperRatings, an independent superannuation research and ratings company. This is the highest rating available and was awarded after a comprehensive review of VicSuper s operations. SuperRatings rated VicSuper as one of the best value for money funds in Australia. For more information on how super funds are rated, visit superratings.com.au

8 Going forward Developments currently underway for 2014/15 include: Continuing review of VicSuper s investment strategy. Launch of SuperStream 1 July 2014 which allows you to rollover electronically online. Participation in SuperRating s RateMySuper, an online tool to compare super funds. Continuing use of technology to improve member experiences with VicSuper

9 Changes in superannuation

10 2014/15 budget changes The newly elected Coalition Government has proposed a number of significant policy developments in regards to superannuation: A delay in the SG increase to 12% rising by 0.5% each year until it reaches 12% in 2022/2023 Individuals can withdraw superannuation contributions in excess of the non-concessional contributions cap from 1 July 2013 From 1 January 2015 untaxed superannuation income will be included in the assessment of eligibility for the Commonwealth Seniors Health Card (CSHC) From 1 July 2014 budget repair levy (3 year 2% debt levy) for applicable incomes Aged pension age to increase to 70 by 2035 From 1 January 2015 pensions will be subject to deeming

11 Questions?

12 VicSuper Investments Looking after your money Oscar Fabian Chief Investment Officer

13 Recent Investment Highlights Generally strong markets have boosted investment returns with all VicSuper s MIC Options exceeding their 10 year objectives For the 10 months to April 2014, the Growth (MySuper) Option returned 13.7% for Accumulation members and 15.1% for Pensioners One new investment mandate funded: Analytic Low Volatility Global Equity fund ($220m) Additional investments in private equity and timber: $50m in PEM PVC III fund and $50m in Stafford SIT VII Fund According to the latest Chant West survey, VicSuper s growth option is in the top quartile for the 1 year and 3 years to 31 st March 2014

14 VicSuper is Top quartile Growth (61-80%) - Performance to end of March 2014 (%) FYTD 1 Year 3 Years 5 Years 10 Years VicSuper Growth Median Source: Chant West, median is of 54 funds

15 Key financial themes World growth will be moderate, led by the US, China and Japan Bond yields will likely rise in 2014/2015 in Australia and globally Within Equities, emerging market valuations look attractive but sentiment remains negative and fundamentals are unclear Australia should have reasonable GDP growth despite remaining below trend of 3.25% Implications for VicSuper fund Overall, we continue to prefer equities over bonds

16 VicSuper s Asset Allocation Strategy

17 Scenario analysis GDP Recession Recovery Expansion Slowdown O/W N U/W 0% Fixed Interest Cash Low vol. funds Equities Credit Real Assets (H/F) Credit Property Cash Low vol. funds Equities Property Real Assets * * Global recession with EMU breakup (15%) Worst case Fixed Interest * Deflation & weaker Europe (10%) Unlikely case Equities Credit Property/Real Assets Commodities Low vol. funds Cash Fixed Interest Low vol. funds Equities Cash Fixed Interest Moderate growth (70%) Base case Real Assets

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20 Equities: EM valuations are attractive

21 RBA hopes that growth will be above trend in 2015 Macquarie s Forecast Source: RBA, ABS, Macquarie Research, August 2013

22 Best guide to RBA monetary policy = unemployment Source: ABS, Macquarie Research, August 2013

23 Fall in mining investment = Drag to growth Source: ABS, Macquarie Research, August

24 Will the growth gap be filled by the housing sector? % Share of GDP Mining Investment Dwelling Investment Jan-64 Jan-72 Jan-80 Jan-88 Jan-96 Jan-04 Jan-12 Source: ABS, Macquarie Research, August 2013

25 Property market driven by investors, not first home buyers Source: ABS, Macquarie Research, August 2013

26 Wage growth rates have fallen sharply Source: ABS, Macquarie Research, August 2013

27 Is the $A still too high?

28 VicSuper International Equities International Equities (40%) Developed Markets (31%) Emerging Markets (9%) Core (75%) Satellite (25%) Core (50%) Satellite (50%) Vanguard Global Equities (Index) Generation Vanguard EM Index Martin Currie Vanguard Carbon Aware Fund Walter Scott Equity Growth Alliance Bernstein Global Value SSGA International Sustainability Fund GTP Global Thematic Analytic Low volatility Fund Sanders Capital Global Value As at 31 August 2013

29 What we have achieved and where the focus is Central theme More dynamic investment approach Constraint Maintain a tight control on costs Strategic goals 1. Refine core/satellite approach to investment structure to improve efficiency and performance 2. Refine/extend investment advice model (internal and external) 3. Improve transparency on investment policies (IPS, ESG, etc) 4. Develop a scenario based approach to DAA analysis 5. Develop a more rigorous approach to investment risk management (e.g. stress testing) 29

30 Questions

31 VicSuper Investment Governance Model TRUSTEE INVESTMENT COMMITTEE VICSUPER ECOSYSTEM SERVICES PTY LTD DAA STEERING COMMITTEE AUDIT, COMPLIANCE & RISK COMMITTEE DYNAMIC ASSET ALLOCATION (DAA) INVESTMENT OBJECTIVES & STRATEGIC ASSET ALLOCATION (SAA) FOR EACH MIC OPTION INVESTMENT RISK MANAGEMENT Who is responsible? Investment Committee DAA Steering Committee VicSuper investment team Advisor Towers Watson Functions Research & recommend DAA tilts away from SAA at MIC option level Research & recommend opportunistic (medium term) investment ideas Who is responsible? VicSuper investment team & executive management Advisor Frontier Advisors Functions Investment objectives & SAA for each MIC MySuper investment option Mix of MIC options Manager research & monitoring Who is responsible? VicSuper Investment team VicSuper Risk & Compliance team Provider BlackRock Solutions Functions Risk budgeting, monitoring & analysis Scenario planning