These are the building blocks of your investment. An asset class is basically just types of investments that have similar characteristics. Understanding a bit about what these asset classes are, and how they might perform, can help you to decide which investments are right for you.
Cash is usually invested in the short-term money market, and can include deposits at call, bank bills, term deposits and negotiable certificates of deposit. You can also access term deposits directly through Self Invest.
Cash is considered the most secure asset class and generally has the lowest volatility and long-term returns.
This is like a loan to a government or a company – the interest rate is set in advance and the principal is paid back at maturity. Bonds can be actively traded (which means their value will change as interest rates change in the market), so they have the potential for both positive and negative returns.
Bonds can be used to preserve capital, enhance returns or act as a hedge against inflation.
Property investments include commercial buildings like offices or shopping centres, industrial properties or residential.
Like shares, property can change value, and distributions of rent also contribute to return. Generally real estate is designed to achieve higher returns over the longer term, but returns can be volatile over the short term.
Equities covers Australian and International shares and Private equity. Buying shares means that you own part of a company (either in Australia or overseas). The investment returns from shares can come both from the change in the value of the shares, and the payment of dividends.
Private equity can be equity (or debt) in companies that aren’t publically traded on a stock exchange.
Equities have historically delivered higher returns over the long term but their value is more likely to fluctuate over shorter time periods.
Commodities covers resources such as base and other metals, natural gas, petroleum or other raw materials. These can provide protection in periods of high inflation. Investment is not in the physical (or hard) assets but rather in derivative instruments (such as futures contracts) giving exposure to the underlying commodity.
Infrastructure is investing in all the facilities that help a government or community to run. This can be roads, utilities (such as power, water or gas), transport (like airports, sea ports or toll roads) or public buildings (schools, libraries). Investment can either be directly into single assets or into externally-managed infrastructure funds.
Infrastructure investments can have both defensive and/or growth characteristics. That’s because these investments aim to achieve returns through both income and potential capital gain when the assets are sold.
Alternative assets, as the name might suggest, are a little different to the more traditional asset classes. They can be both defensive and/or growth assets, which means they can offer a level of diversification you don’t generally get in the more traditional assets.
The types of alternatives we may invest in include:
Use the Investment Choice Calculator to see the mix of asset classes in each QSuper investment option.
Please remember, past performance isn’t a reliable indicator of future performance.