Our investment options are changing
Investments

Our investment options are changing

We’re making changes to our range of investment options to give you greater choice, flexibility and more lower-cost ways to help grow your retirement savings.

We're making some important changes to our range of investment options.  The date on which these changes will take effect (Effective Date) is 8 October 2020.1 

Investment options we're renaming

Investment options currently available to members:

  • Australian Shares will be renamed to Australian Shares (Active)
  • International Shares will be renamed to International Shares (Active). 

Investment options we're adding

Three new ‘passively invested’ lower-cost investment options:

  • Indexed Balanced
  • Australian Shares (Indexed)
  • International Shares (Indexed).

Read more

Investment options we're closing

Two investment options currently available to members:

  • Targeted Return
  • Indexed Shares.

On the Effective Date, these two options will be closed and funds invested in the options that are closing will automatically be switched to the investment options as set out in the table below. 

The switch will also apply to the allocation of future contributions and future pension drawdown payments so that funds allocated to or drawn from the investment options that are closing will be instead allocated to or drawn down from the replacement investment options as set out in the table below:

Closing option:Switched to:
Targeted Return100% to Moderate
This more popular option has:

  • the same return objective 
  • the same risk level
  • a different investment mix (the Moderate option invests in international shares, property and cash while the Targeted Return option does not)
  • a different investment strategy, and
  • lower fees and costs.
Indexed Shares50% to Australian Shares (Indexed) and
50% to International Shares (Indexed)
When combined, these two options provide similar exposure to indexed shares with similar levels of risk and similar fees and costs, but with the added advantage  of the flexibility to change the proportions of your investments in International and Australian shares. In addition, the new investment options each have their own return objectives, risk labels, investment mixes and investment strategies as well as their own fees and costs.

1 In the event the Effective Date of 8 October 2020 is delayed for any reason, we will implement the changes as soon as possible, but no later than 30 November 2020. We will let you know should this occur.

More investment options to choose from

After the changes come into effect, we'll have 11 investment options for members to choose from (up from 10):

OUR INVESTMENT OPTIONS
OPTION CATEGORY BEFORE 8 OCTOBER 2020 FROM 8 OCTOBER 2020 WHAT’S CHANGED
Pre-mixed options MySuper Balanced 2 MySuper Balanced 2 No change
High Growth High Growth No change
Targeted Return
Option no longer available

Indexed Balanced New option available
Moderate Moderate No change
Conservative Conservative No change
Asset class options Australian Shares Australian Shares (Active) Name change only
International Shares International Shares (Active) Name change only
Indexed Shares
Option no longer available

Australian Shares (Indexed) New option available

International Shares (Indexed) New option available
Property Property No change
Cash Cash No change

2 For pension members the MySuper Balanced option is known as the Balanced option.

Introducing our three new indexed investment options

Available from the Effective Date, these new options give you access to lower-cost Balanced, Australian Shares and International Shares options.

What are indexed options? 

Most stock markets, such as the Australian Securities Exchange (ASX), have indices that track their value over time, for example the S&P/ASX 100 is an index made up of the 100 largest companies on the ASX. 

Generally, indexed investment options are made up of a mix of investments that are representative of one or more indices and aim to perform in line with market returns.  Indexed investment options are available to cover almost every industry sector and asset class, including Australian and international shares, fixed interest and cash. The passive approach of indexed investing involves less time and cost than 'active' investing.

This is different to an actively invested approach we use for some of our other options like MySuper Balanced. With an active investment approach the underlying investments are hand-picked by specialist investment managers which involves more time and cost.

Indexed Balanced

Strategic asset allocation

ASSET CLASSASSET ALLOCATIONRANGE
Passive Australian Shares35%20-50%
Passive International Shares35%20-50%
Passive Fixed Interest28%0-60%
Cash2%0-20%

Investment objective

To achieve a return (net of tax and investment expenses) that exceeds the increase in the CPI by at least 3.25% per year over rolling 10-year periods. 

Investment strategy

To invest in a diversified range of passive investments, with a greater proportion in shares and the remainder in cash and fixed interest.

Suggested minimum investment time frame

5 years

Expected frequency of negative annual returns in any 20-year period

Approx 5.5 

Risk band (1-7)

6

Risk label

High

Investment fee

0.06% p.a.

Indirect cost ratio (ICR)

0.00% p.a.

Australian Shares (Indexed)

Strategic asset allocation

Asset classasset allocation
Passive Australian Shares100% 3

Investment objective

To achieve a return (gross of tax and investment expenses) matching that of the S&P/ASX 100 Accumulation Index over rolling 3-year periods.

Investment strategy

To invest totally in Australian shares on a passively managed basis.

Suggested minimum investment time frame

8 years

Expected frequency of negative annual returns in any 20-year period

Approx 7.

Risk band (1-7)

7

Risk label

Very high

Investment fee

0.07% p.a.

Indirect cost ratio (ICR)

0.00% p.a.

3 From time to time the investment managers may hold cash.

International Shares (Indexed)

Strategic asset allocation

Asset classasset allocation
Passive International Shares100% 3

Investment objective

To achieve a return (gross of tax and investment expenses) matching that of the MSCI World ex-Australia Total Return Index (net dividends reinvested), 70% unhedged and 30% hedged in Australian dollars, over rolling 3-year periods.

Investment strategy

To invest in international shares on a passively managed basis.

Suggested minimum investment time frame

7 years

Expected frequency of negative annual returns in any 20-year period

Approx. 6

Risk band (1-7)

7

Risk label

Very high

Investment fee

0.07% p.a.

Indirect cost ratio (ICR)

0.01% p.a.

3 From time to time the investment managers may hold cash.

More information about our new range of investment options and the investment options we're renaming will be available in updated versions of our Product Disclosure Statements (incorporating our Investments Guide and Fees and Costs booklet) which will be available to members at lucrf.com.au or by calling 1300 130 780.

Planning on changing your investment option?

Switch before the Effective Date and your selection from existing options will be subject to the changes outlined above on the Effective Date.


This means that if you choose to switch any of your account balance into the Targeted Return or Indexed Shares investment options before the Effective Date, any balance you hold in these investment options will be automatically switched to the different investment options on the Effective Date as set out under the heading 'Investment options we're closing' above. 

To invest in any of our new investment options, you will need to wait until after the Effective Date to make a switch request.

For more information about changing investment options read our PDS and Investments Guide.


How do I switch?

There are three ways you can switch your investment options:

We don't charge any fees or costs for investment switches.

To help understand our investment options and choose how your balance is invested, read our Investment Guide and complete our Investment Profile Questionnaire.

Do you have questions about your investment options?

If you need help you can request a callback from one of our experienced financial advisers at no extra cost to you.

Request a callback

1 In the event the Effective Date of 8 October 2020 is delayed for any reason, we will implement the changes as soon as possible, but no later than 30 November 2020. We will let you know should this occur.

Advice about your LUCRF super account is included in your membership fees.

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