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Growth vs defensive assets

An asset is a type of investment. Each has a different level of risk and return. They’re commonly grouped into two categories: growth and defensive. Most super fund portfolios contain a mix of both growth and defensive assets.

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Growth assets

  • Have the potential to deliver higher returns over the long term
  • More susceptible to economic and market changes (i.e. they have higher volatility) than defensive assets
  • May fluctuate in value over periods of time
  • Assets are medium-high risk
  • Are used to meet long-term financial goals (five years or more)

Types of growth assets

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Property and infrastructure securities

Super funds may invest in commercial, retail or industrial property that is listed on share markets. They may also invest in infrastructure securities, which own assets such as transport and utilities.

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Australian and international shares

Most super fund portfolios invest in shares (or equities), which are part ownership of a company. Returns from shares include both capital growth (or loss) and income through dividends.

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Defensive assets

  • Generally less volatile than growth assets and may deliver lower returns over the long term
  • Provide stable returns and diversification to a portfolio
  • Assets are low-medium risk
  • Are used to meet short-term financial goals (two years or more)

Types of defensive assets

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Cash

Super funds invest in cash (such as term deposits) because it provides stable, low risk income (usually as interest payments). These assets usually have a short investment timeframe.

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Fixed interest

Super funds may invest in government or corporate bonds, mortgages or hybrid securities. These assets operate like a reverse loan – they pay a regular interest payment over a fixed term.

To check how your super is invested, take a look at your statement, log on to FirstNet or download the Colonial First State app.

Disclaimer

Information on this webpage is provided by Avanteos Investments Limited ABN 20 096 259 979, AFSL 245531 (AIL) and Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (CFSIL). It may include general advice but does not consider your individual objectives, financial situation, needs or tax circumstances. You can find the Target Market Determinations (TMD) for our financial products at www.cfs.com.au/tmd, which include a description of who a financial product might suit. You should read the Financial Services Guide (FSG) available online for information about our services. This information is based on current requirements and laws as at the date of publication.

Tax considerations are general and based on present tax laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.

AIL and CFSIL are not registered tax (financial) advisers under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise under a tax law.