Investment Philosophy

Note our investment philosophy is generally ‘passive’ – based on decades of academic and practical research. In the long term, growth assets tend to outperform safer assets but growth assets will deliver a bumpy ride – they can go down as well as up in the short term. Our projections assume your superannuation is invested in similar diversified options to the typical, mainstream superannuation funds. Super funds tend to offer a range of choices on a scale of ‘defensive’ to ‘high growth’ options (see ASIC Moneymart website for more information). In the long run, 80-90% of investment returns come from your decision of how much to allocate between growth assets vs defensive assets. It’s this decision that matters more than most, as well as your choices on how much to save and then spend (and subject to maintaining a diversified mix of securities and keeping costs reasonable). We don’t believe in trying to ‘pick winners’ or strategies that promise to ‘beat the market’. Yes, sometimes stock picking will pay off (and in these cases there’s often a lot of marketing about it!), but long term data shows that, for the main asset classes, this tends to be caused by randomness more often than skill. Those who underperform are less vocal. The ones who lose often keep more quiet. Large scale analyses of active management and stock-picking show that, on average, active management approaches tend to rarely add more than the fees involved. 

The way actuaries deal with and model the volatility of growth assets is through sophisticated stress testing. We run your whole retirement projection through a full range of possible investment return sequences and assess the combined impact of higher returns but more volatility from your growth asset exposure to provide you with results that include probability.