LGIAsuper has overhauled its asset allocations in an effort to chase post-COVID returns, as well as introducing a new asset class to its portfolio and cutting investment fees.
The changes have taken place from 1 November, including reduced exposure to property, traditional bonds and international shares, alongside increased allocations to infrastructure, cash and Australian shares.
The fund is also introducing private capital, aiming for higher returning investments while it alters the mix of its alternative assets.
LGIAsuper chief investment officer Troy Rieck said the new allocations would provide greater transparency to members on their investments, provide more flexibility to invest and better position savings in the current investment environment.
“We are focusing on assets where we expect higher risk-adjusted returns to support our members in building their retirement balances and generating the income they need in retirement,” Mr Rieck said.
“Placing more emphasis on generating sustainable income from our diversified portfolio makes sense in a world when capital gains will be harder to generate.”
He noted the fund has also cut its investment fees. LGIAsuper is charging from as little as 0.03 per cent for its cash option to 0.42 per cent for its Socially Responsible Australian Shares product.
The fund expects that the indirect cost ratios for products this financial year will be materially lower than for financial year 2020, with the exit of a number of investment managers.
Looking at infrastructure, LGIAsuper has recently increased its allocation to the Sunshine Coast Airport and is reviewing additional investments in Queensland.
However, it has promised to maintain its commitment to investing in “financially successful community assets”, such as the Gold Coast Light Rail.
Mr Rieck said the fund’s reduced property and international shares allocations reflected market conditions, as it aims to protect members from ongoing volatility.
“We expect better returns from infrastructure investments in coming years compared to property and will be adding to our portfolio over time,” he said.
“Current valuations also suggested rebalancing our share market portfolio in favour of domestic assets at the expense of our global portfolio, after a long period of being overweight in global shares.”
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].