What is an asset class?

An asset class refers to a group of assets that are considered to have similar risk and return expectations.

VicSuper invests in five different asset classes:


Equities

Equities are often called company shares or stocks. This asset class usually provides the highest average long-term returns but may also be subject to a higher risk of low or negative returns (high volatility) in the short to medium term.

Equities are classified as growth assets because they primarily provide returns in the form of capital gain (or loss) as well as a dividend or income yield.

VicSuper's investments in this asset class are shares in public companies listed on stock exchanges, which can be bought and sold by the public. The asset class is made up of three sub-asset classes, being Australian equities, International developed market equities and international emerging market equities.

Returns are made when the market price increases and dividends are paid. On the other hand, investment losses are made when the market price of these shares decreases.


Alternatives

Investments in this growth asset class currently consist only of Australian and international private (unlisted) equity. The private equity sub-asset class contains equities that are not listed on stock exchanges.

Returns are made through periodic revaluations of assets, when a company lists on a stock exchange or is sold to another company or through the distribution of dividends.

Over time other sub-asset classes may be added to alternatives. The alternatives asset class will hold investments that do not fall under any of the other four asset classes.


Real assets

These are investments in property, infrastructure, agriculture and timber. In line with industry, VicSuper has defined the 'real assets' asset class as exhibiting the attributes of both growth and defensive assets. 

1. Property

These are assets such as office buildings, shopping centres and industrial buildings. These investments are usually structured for capital growth and rental income. Returns are made from rental income and increases in property market value.

2. Infrastructure

These are assets that deliver services necessary for daily life and economic activity such as airports, toll roads and pipelines. Returns are made from fees, patronage, rental income and the revaluation of assets.

3. Agriculture

VicSuper's investments in agriculture include land and water assets primarily located in northern Victoria. Returns are currently derived from traditional broad-acre agriculture, water revenue streams and the movement in asset market value.

4. Timber

These are timber assets (mainly plantation timber or managed forests) managed for production of pulp, chip, sawn timber and higher-value wood products. Returns are derived from net rental income and increases in asset market value.


Fixed interest

These are investments in debt securities issued by governments, semi-government agencies and corporations. Often called 'bonds', they are issued for a set amount (the principal or face value) over an agreed period, usually at a set interest rate (the yield). Returns are made from regular coupon payments and the movement in capital value.

Cash and fixed interest are considered defensive asset classes, as they are not subject to the level of volatility experienced by some other asset classes such as equities.


Cash

These are investments held in bank bills and short-term deposits (for periods of 12 months or less) with banks and other financial institutions. Interest earned provides returns which are generally reliable and consistent but may be lower than other asset classes.

Cash and fixed interest are considered defensive asset classes, as they are not subject to the level of volatility experienced by some other asset classes such as equities.

 

What is an asset class?

An asset class refers to a group of assets that are considered to have similar risk and return expectations.

VicSuper invests in five different asset classes:


Equities

Equities are often called company shares or stocks. This asset class usually provides the highest average long-term returns but may also be subject to a higher risk of low or negative returns (high volatility) in the short to medium term.

Equities are classified as growth assets because they primarily provide returns in the form of capital gain (or loss) as well as a dividend or income yield.

VicSuper's investments in this asset class are shares in public companies listed on stock exchanges, which can be bought and sold by the public. The asset class is made up of three sub-asset classes, being Australian equities, International developed market equities and international emerging market equities.

Returns are made when the market price increases and dividends are paid. On the other hand, investment losses are made when the market price of these shares decreases.


Alternatives

Investments in this growth asset class currently consist only of Australian and international private (unlisted) equity. The private equity sub-asset class contains equities that are not listed on stock exchanges.

Returns are made through periodic revaluations of assets, when a company lists on a stock exchange or is sold to another company or through the distribution of dividends.

Over time other sub-asset classes may be added to alternatives. The alternatives asset class will hold investments that do not fall under any of the other four asset classes.


Real assets

These are investments in property, infrastructure, agriculture and timber. In line with industry, VicSuper has defined the 'real assets' asset class as exhibiting the attributes of both growth and defensive assets. 

1. Property

These are assets such as office buildings, shopping centres and industrial buildings. These investments are usually structured for capital growth and rental income. Returns are made from rental income and increases in property market value.

2. Infrastructure

These are assets that deliver services necessary for daily life and economic activity such as airports, toll roads and pipelines. Returns are made from fees, patronage, rental income and the revaluation of assets.

3. Agriculture

VicSuper's investments in agriculture include land and water assets primarily located in northern Victoria. Returns are currently derived from traditional broad-acre agriculture, water revenue streams and the movement in asset market value.

4. Timber

These are timber assets (mainly plantation timber or managed forests) managed for production of pulp, chip, sawn timber and higher-value wood products. Returns are derived from net rental income and increases in asset market value.


Fixed interest

These are investments in debt securities issued by governments, semi-government agencies and corporations. Often called 'bonds', they are issued for a set amount (the principal or face value) over an agreed period, usually at a set interest rate (the yield). Returns are made from regular coupon payments and the movement in capital value.

Cash and fixed interest are considered defensive asset classes, as they are not subject to the level of volatility experienced by some other asset classes such as equities.


Cash

These are investments held in bank bills and short-term deposits (for periods of 12 months or less) with banks and other financial institutions. Interest earned provides returns which are generally reliable and consistent but may be lower than other asset classes.

Cash and fixed interest are considered defensive asset classes, as they are not subject to the level of volatility experienced by some other asset classes such as equities.