Diversified investment options are flexible, with the ratio of asset classes changing over time to take advantage of market conditions.
To help reduce the impact of large market fluctuations and corrections, our diversified options are invested across a range of asset classes such as shares, cash and fixed income. These asset classes are the building blocks of your investment and the main driver of returns.
Each diversified option is assigned a medium to longer term asset allocation, known as the strategic asset allocation. We also establish asset allocation ranges which are the minimum and maximum amounts we can invest in each asset class.
The actual asset allocation in place at a particular time may vary from the strategic asset allocation because we use an active asset allocation approach.
Our asset allocation approach
We use an active approach to asset allocation that allows us to take advantage of market conditions by temporarily increasing or decreasing our exposure to a particular asset class. This can help shield members from the risks of being overexposed to expensive markets and add additional incremental returns by increasing exposures to asset classes when they are attractive. This is one of the ways we look to add value to our investments and is outlined in the below video.