VicSuper's investment approach
VicSuper uses an investment approach known as a 'core and satellite' approach.
The 'core' for each asset class consists of passively managed indexed investment mandates (ie the underlying assets are bought and sold infrequently). The 'satellite/s' are carefully selected and actively managed to try and exceed the returns of the market.
Passive investment management
Currently, the passively managed 'core' constitutes the majority of VicSuper Fund's assets. This approach seeks to closely match the relevant benchmark index, and achieve investment returns equal to the return of the relevant financial market.
For example, if the S&P/ASX 200 Accumulation Index (the largest 200 companies listed on the Australian Securities Exchange) achieves a return of 10% in a year, the investment manager aims to achieve a similar return before fees and charges.
Indexing is an important part of VicSuper's investment strategy.
Indexing focuses on low portfolio turnover which is expected to lead to a reduction in the cost of investing, and can aid better overall returns while closely matching the benchmark in the long term.
Active investment management
For a proportion of fund assets, we use active investment (the satellite/s). This type of investing aims to outperform the market by investing in a smaller number of securities that are believed to achieve higher returns than others. Active equity investment managers for example make their investment decisions based on extensive research and analysis of business and management quality and company earnings forecasts.
VicSuper's investment strategy allows for the use of active management in Australian and international equities (including sustainability investments), Australian and international fixed interest.