Each of our investment options have different objectives and investment strategies that will provide different risk levels and returns.
Each option has a risk band and risk level assigned to it. This is known as the Standard Risk Measure.
The Standard Risk Measure is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20 year period.
The seven risk bands and risk levels are shown in the following table:
|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|
Compare the risk levels of each investment option in our summary of investment options table.
Please note that the Standard Risk Measure isn’t a complete assessment of all forms of investment risk, for instance it doesn’t detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. It also doesn’t take into account the impact of administration fees and tax or the likelihood of a negative return.
These are calculated using a range of assumptions about how investment markets are forecast to perform, how much volatility there is likely to be and how different asset classes are related. These assumptions are not guaranteed.
The output is produced on the basis of the probability of a negative return in x years out of 20. The expected chance of loss is on a gross of tax basis excluding imputation credits, and is before administration fees but after taking account of investment management fees. A conservative approach to incorporating expectations for investment manager outperformance has been taken.
These are estimates only and aren’t guaranteed. Actual outcomes may differ significantly from the estimates. Energy Super will review the calculation of the Standard Risk Measures annually or earlier if there’s been a material change to the underlying risk and return characteristics of the investment options.
It’s important that you’re comfortable with the risks and potential losses associated with your chosen investment option/s.
For more information on how the Standard Risk Measure is calculated, you can get a technical description of the methodology by email us at firstname.lastname@example.org