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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 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
Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (CFSIL) is the issuer of the FirstChoice range of super and pension products from the Colonial First State FirstChoice Superannuation Trust ABN 26 458 298 557. CFSIL also issues interests in products made available under FirstChoice Investments and FirstChoice Wholesale Investments. This document may include general advice but does not take into account your individual objectives, financial situation or needs. The Target Market Determinations (TMD) for our financial products can be found at www.cfs.com.au/tmd and include a description of who a financial product is appropriate for. You should read the relevant Product Disclosure Statement (PDS) and Financial Services Guide (FSG) carefully, assess whether the information is appropriate for you, and consider talking to a financial adviser before making an investment decision. The PDS and FSG can be obtained from www.cfs.com.au or by calling us on 13 13 36.