Master the basic terms

You can choose to invest your super into one or more investment options that are made up of a single or mix of asset classes such as shares, property, fixed interest and cash. Sunsuper offers 20 investment options including diversified and single asset class options, and actively managed and index options. You can see Sunsuper’s full range of options here.

An investment option comprising multiple asset classes such as shares, private capital, property, infrastructure, fixed interest, hedge funds and cash. Diversification across a variety of assets aims to reduce the risk of a single asset class suffering a downturn in value. Sunsuper offers a number of diversified options designed to meet the needs of a range of members with different investment needs and risk appetites.

The trade-off when making an investment. Growth assets such as shares are expected to earn higher returns over the long term but come with higher risk of value fluctuation in the short term. Assets such as fixed interest and cash are expected to earn lower returns than growth assets but do come with lower risk that their value will significantly fall in the short term.

When investing in a Sunsuper investment option, you buy “units” in that option. Each unit has a dollar value or “unit price”. These are calculated most often daily. EG: if you invest $1,000 in an option with a unit price of $1, you acquire 1,000 units. If the unit price the following day is $1.50, your balance increases to $1,500; if it falls to $0.75, the balance is $750.

A unit of ownership in a company. Companies issue shares (also called equities or stocks) to raise money. Investors pay money in exchange for units of ownership in the company. A company’s value is the number of shares multiplied by the price of a share. Share prices fluctuate daily because they are based on what investors collectively believe the company can earn in the future.

A developing country. Shares in emerging markets (developing countries) are expected to achieve higher long-term returns but are also exposed to higher risk given the uncertain political and economic conditions in many developing economies. Sunsuper invests in companies within emerging markets such as Brazil, Russia, India and China. In contrast, developed markets shares are those in companies in the US, UK, Europe and Australia.

Investments made up of loans to borrowers such as governments. The most common type of fixed interest investments are bonds. Bonds offer a promise to have the money initially invested returned at a specific (maturity) date, plus periodic payments of interest. Fixed interest investments are less risky than growth assets such as shares and property but, in turn, offer a lower rate of return than some other assets.

The opposite of passive management. A style of investment management where investment managers consciously choose assets to invest in based on the expectation of better returns than the broader market, despite the higher costs involved. Sunsuper uses active managers with genuine skill where we believe they offer value for money.

Strategy to reduce the effects of currency movement on an investment. Because currency fluctuations can impact the value of overseas investments, currency hedging can be used to fix the value of the Australian dollar relative to one or more foreign currencies to protect from exchange rate movements. Investments can be wholly or partially hedged or not hedged at all (unhedged).

Sunsuper generally prefers to construct options using a multi-manager approach, using a combination of investment managers to provide diversification and reduce the risk of exposure to any one manager or investment style.

The opposite of active management. If we don’t use active managers, we use lower-cost index (or passive) strategies that aim to replicate the performance of a broad market index such as the S&P/ASX300 for Australian shares.

Where we will invest your super if you don’t make a choice. This option contains a balanced mix of assets including shares, property, private capital, diversified strategies, infrastructure, fixed interest, hedge funds and cash. Designed for members who are working to build their super balance who want to generate wealth over the long term, and gradually transition to lower-risk investments as they approach age 65. Find out more.