Investment risk

21 January 2020

There are various types of risk associated with investing in a super fund. All investments are subject to varying risks and generally all investments change in value over time.

Risks to consider
The significant risks that relate to investing in BUSSQ are:

  • Inflation
  • Market risk
  • Individual investment risk
  • Interest rate risk
  • Currency risk
  • Liquidity risk
  • Derivatives risk
  • Regulatory risk, and
  • Timing risk

The effect of these risks is reduced by diversification, that is, by investing your super in a wide range of different types of investments, such as those in which BUSSQ invests.

Other risks that may have an impact when investing in BUSSQ include:

  • Taxation risk, and
  • Insurance risk.

Because each of BUSSQ’s investment options has a different investment mix, the risks of investing in each option are different.

Measuring risk
A standard risk measure for investment options has been developed for super funds to make it easier for you to compare investment options (both within and across super funds). The numeric measure is based on ‘how likely will there be negative annual returns over a 20 year period’.

There are seven risk bands and they are as follows:

 
Risk band Risk level

Estimated number of negative annual returns over any 20 year period

1 Very low Less than 0.5
2 Low 0.5 to less than 1
3 Low to medium 1 to less than 2
4 Medium 2 to less than 3
5 Medium to high 3 to less than 4
6 High 4 to less than 6
7 Very high 6 or greater

 

The Standard Risk Measure is based on industry guidance to allow you to compare investment options that are expected to deliver a similar number of negative annual returns over any 20 year period. The Standard Risk Measure is not a complete assessment of all forms of investment risk, for instance it does not include details of what the size of a negative return could be or the potential for a positive return to be less than you may require to meet your objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return.

You should still ensure you are comfortable with the risks and potential losses associated with your chosen investment option(s). The use of the Standard Risk Measure is endorsed and strongly recommended by the Australian Prudential Regulatory Authority (APRA), Australian Securities and Investments Commission (ASIC), Association of Superannuation Funds of Australia (ASFA) and the Financial Services Council (FSC) for all Australian super funds.

If you would like to check the risk factors and investment objectives for the BUSSQ investment options you’re currently in, you can see this information on our investment options page.

If you have any questions or would like further information, please call us on 1800 692 877. As a BUSSQ member you have access to personal financial advice on investment choice at no extra cost*. 

 

*Personal advice is limited to BUSSQ products and is advice on insurance, investment choice, contributions and retirement. The cost of this advice is included in the BUSSQ Trustee related costs and this advice is provided by Link Advice Pty Ltd (ABN 36 105 811 836 AFSL 258145).

Before acting, you should review the relevant Product Disclosure Statement to ensure you have all the information about the BUSSQ product and how it works and consider the appropriateness of the information to your needs or seek independent advice from a properly qualified professional. Prepared by BUSS (Queensland) Pty Ltd (ABN 15 065 081 281, AFSL 237860) as Trustee for BUSSQ (BUSSQ Fund, ABN 85 571 332 201).

 

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