We include a broad range of asset classes to ensure your portfolio is diversified across different market conditions. However, we avoid more complex investments unless they clearly reduce risk or offer higher potential returns.
The table below shows which assets are part of our strategic allocations and why we’ve chosen them:
| Asset class | Characteristics |
| Cash and money market | Capital preservation, liquidity |
| Domestic government bonds | Capital stability, provision of income |
| International government bonds | Capital stability, provision of income |
| Inflation linked government bonds | Capital stability and inflation-protected income |
| Corporate bonds (investment grade and high yield) | Higher income but historically riskier than government bonds |
| Emerging market sovereign and corporate bonds | Higher income but historically riskier than domestic government bonds |
| Domestic equities | Growth via domestic companies |
| International developed market equities | International growth, with currency exposure unhedged or hedged |
| Emerging market equities | Higher prospective growth and risk premia |
| Alternatives | Diversification through alternative sources of risk premia |
- The ‘fit’ of the fund’s underlying investments and benchmark index with the desired exposure within the specific asset class.
- How well the fund tracks its underlying benchmark index.
- The methodology being used to replicate the benchmark index. For example, whether it physically holds the underlying securities referenced by the index or uses a synthetic replication strategy.
- The total expense ratio of the fund, which represents the total cost of investing in the fund.
- The size and liquidity of the fund.
