The chief investment officer behind one of the best performing funds of 2013 says comparisons of performance figures will be less relevant for members in 2014.
Janice Sengupta of the Aon Master Trust has seen her fund’s Balanced Growth Active option ranked first in recent surveys by Chant West and SuperRatings. For the year to the end of October, it achieved a 20.1 per cent return and the trust’s Balanced Growth – Index option was close behind on an 18.9 per cent return. Two thirds of members are invested in these two options.
Part of its success has come for its currency hedging policy which hedges all of its fixed interest portfolios and 30 per cent of its equities portfolio.
The fund is adopting a lifecycle strategy as its default on January 1st 2014 with 26 different cohorts that will make comparability difficult with other funds.
Sengupta said: “The performance of our balanced growth options is all quite delightful but that is not really the main game, it is not all about how much your return is compared to another fund’s return or another option in the fund.”
“Comparing the performance of one fund over another is not the question people should be asking. The whole point of saving for retirement is to better enable people to live in retirement with some modicum of dignity and so the question should be am I on track to do that.”
The fund will now be 100 per cent invested in high growth assets until age 42. From age 43, member’s assets will switch by 4 percentage points a year into a defensive portfolio.
Sengupta said the fund is introducing a lifecycle approach for the Aon MySuper to help focus members on their individual paths to retirement.
From January 1 2014, new default contributions in the Aon Master Trust will be allocated to the Aon MySuper. Switching of some accrued default balances will also begin in January.
All members affected by the new lifecycle option have received tailored letters informing them of the change and their ability to opt out. The trustees is submitting a request to ASIC for a license variation in order to offer limited advice for members on questions relating to investment options appropriate for risk tolerance, appropriate level of insurance, contributions, and retirement adequacy. The plans for limited advice include online and telephone service.
Sengupta noted that a balanced growth option may remain a good choice for some members, but that depends on how many years they have until retirement, their overall health and wealth, and other circumstances.