The Fund’s Investments

Member investment choice

MIESF offers two investment choices, a MySuper option and the High Growth option.

You can elect to have all or part of your account invested in these options. You have the opportunity to switch between options twice a year, with effect from 30 June and 31 December. Any choice you make will apply to your current account balance and your future contributions.

If you wish to make an investment choice you need to complete a Member Super Choices form and return it to the Fund at least one week before the switch date.

The Fund’s Pension section members are invested in the Trustee Option which has the same investments as MIESF MySuper.

MIESF MySuper is the default investment option for the Fund. Members not electing to switch part or all of their account to the High Growth Option have their entire account balance invested in MIESF MySuper.

Investment objectives for MIESF MySuper

The aim of MIESF MySuper (and the Trustee Option) is to ensure the security of your retirement money and to provide a reasonable rate of return above bank rates of interest over the medium and long-term without taking undue financial risk. This is based on the Trustee’s belief that members have a strong need to preserve capital and achieve a positive earnings rate each year.

In order to achieve this aim, the following investment objectives have been established for MIESF MySuper:

• Avoid a loss; that is to be in a position to declare a positive rate of return for each year ending 30 June (the short-term return objective); and
• Beat inflation; that is to achieve a rate of return which exceeds the rate of inflation (as measured by the CPI) by at least 2% per annum, after allowance has been made for tax and investment costs, over rolling ten-year periods measured at each 30 June (the long-term return objective).

Please note that the investment objectives are neither a forecast nor a guarantee of future performance.

The Trustee reviews these objectives annually to ensure that they continue to be appropriate for MIESF’s members. The review considers different aspects of MIESF’s membership such as member ages and average balances.

The Trustee has developed an investment strategy which it considers is likely to allow MIESF MySuper to achieve its investment objectives over the indicated timeframes. There is the risk that as market conditions change, the investment objectives may not be achieved. Investment markets can both rise and fall, and for this reason a positive return cannot be guaranteed.

There is an industry wide “Standard Risk Measure” which measures the estimated number of negative annual returns over any 20 year period. This has been calculated at 2.9 for MIESF MySuper and the Trustee Option. The Standard Risk Measure covers seven Risk Bands/Risk Labels from 1 (very low risk) to 7 (very high risk). The Risk Band for MIESF MySuper and the Trustee Option is 4 (medium risk).

Investment strategy for MIESF MySuper

In order to achieve its investment objectives, the Trustee invests the Fund’s assets in a number of different asset classes including Australian and overseas shares, property, private equity, infrastrucure, fixed interest and cash. The Trustee sets the investment strategy in the interests of members and members cannot select the underlying investments.

In establishing the investment strategy for MIESF MySuper, the Trustee groups asset classes by return drivers and risk attributes. Each asset group plays a different role in a diversified portfolio. The three asset groups in your portfolio are:

– “Equities” (Australian shares, international shares and private equity) which are expected to provide returns in excess of cash and inflation;

– “Real assets” (property and infrastructure) which are expected to diversify equity risk in a portfolio and provide long-horizon income returns that are less sensitive to inflation risk; and

– “Interest-bearing assets” (fixed interest and cash) which are expected to diversify equity risk in a portfolio, dampen volatility and provide liquidity.

The investment strategy sets a mix of these asset groups to give a broad exposure to different risk drivers, countries, currencies, underlying businesses and types of assets. The aim of having a broad mix is to get positive returns but, at the same time, make the investment portfolio more resilient to economic and financial market shocks and so provide less volatile returns to members.

The Trustee regularly reviews the investment strategy, taking into account the current and expected market conditions, and changes to the investment mix are made when necessary. The Trustee Board or its Investment Committee usually meets every month to review the investment portfolio and consider the state of the economy and financial markets in Australia and overseas.

Further information on the Fund’s investments can be found in the 2023 Annual Report and the Product Disclosure Statement.

How the assets of MIESF MySuper are invested

The following table shows the allowable range and target allocations for each asset class in MIESF MySuper effective from 30 June 2023.

The following chart shows the asset allocation of MIESF MySuper for the past two years:

Investment objectives for the High Growth Option

The aim of this investment option is to provide Main section members with an exposure to Australian and International Shares of around 90%. This option is designed to deliver higher long term returns to members, but is likely to experience significantly higher volatility than MIESF MySuper. This option may be suitable for those members who can tolerate a higher degree of risk and are prepared to have an investment horizon of at least five to seven years.

The investment objectives of the High Growth Option are:

• Provide capital growth over rolling seven-year periods measured at each 30 June; and
• Beat Inflation; that is to achieve a rate of return, which exceeds the rate of inflation (as measured by the CPI) by at least 4% per annum, after allowance has been made for tax and investment costs, over rolling ten-year periods measured at each 30 June (the long-term return objective); and
• Achieve a total return, after allowance has been made for tax and investment costs, that is greater than the median (middle ranking) return of “growth” investment options in the SelectingSuper survey, over rolling five-year periods measured at each 30 June.

There is an industry-wide “Standard Risk Measure” which measures the estimated number of negative annual returns over any 20 year period. This has been calculated at 5.2 for the High Growth Option. The Standard Risk Measure covers seven Risk Bands/Risk Labels from 1 (very low risk) to 7 (very high risk). The Risk Band for the High Growth Option is 6 (high risk).

Investment strategy for the High Growth Option

For the High Growth Option, the Trustee currently invests in the Vanguard® High Growth Index Fund. The Fund’s Investment Committee and Trustee Board review the use of this fund from time to time and may vary this investment at their discretion. The Trustee sets the investment strategy in the interests of members and members cannot select the underlying investments.

The following table shows the allowable range and target allocations for each asset class in the High Growth Option effective from 30 June 2023.

As at 30 June 2022 and 30 June 2023 the actual asset allocations were:

• 36% Australian Shares
• 38% International Shares (Unhedged)
• 16% International Shares (Hedged)
• 3% Fixed Interest – Australian
• 7% Fixed Interest – International (Hedged)

The allowable range and target allocations have not changed since late July 2017.

MIESF Portfolio Disclosures

Each investment option in MIESF is made up of multiple underlying assets.

Details of these underlying assets can be found under MIESF’s Portfolio Holdings Disclosures as at 31December 2023.