STATE SUPER FINANCIAL
SERVICES – INVESTMENT
BELIEFS AND PRINCIPLES
Final Version: AUGUST 2015
STATE SUPER FINANCIAL SERVICES – INVESTMENT BELIEFS AND PRINCIPLES
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Preamble

Our primary purpose is to improve our clients’ financial wellbeing, especially in retirement.

We will be aware of competitor practice when setting investment strategy, but this will be subordinate to
our primary purpose.

As a learning organisation, we seek to maintain partnerships with suitable organisations and, by
drawing upon their expertise and experience, aim to improve outcomes for our clients.

Our key competitive advantage is our understanding of public sector superannuation and our ability,
through our financial planning and investment processes, to create tailored solutions to meet our clients’
specific objectives.

Our fiduciary obligations are paramount. We believe that, all other things being equal, improving the
environmental, social and governance (ESG) profile of portfolio assets will improve the long-term, riskadjusted performance of the fund. Further information is available in our Environmental, Social and
Governance Policy.

In accordance with our fiduciary obligations, we act responsibly and represent our clients’ best interest
when investing. This includes, where practical and subject to our primary purpose, limiting investing in
assets backed by organisations causing severe and lasting damage to the environment or society.
State Super Financial Services Australia Limited trading as StatePlus
ABN 86 003 742 756 | AFSL 238430
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STATE SUPER FINANCIAL SERVICES – INVESTMENT BELIEFS AND PRINCIPLES
Investment beliefs and the applications of these beliefs
Belief
Application
Objectives
Security of real income in retirement is our
clients’ primary objective
We will define specific return and risk objectives for
each of our investment options.
For our client’s lifestyle investments, we will define our
investment return objectives as a real target return,
above CPI inflation or cash, over a relevant timeframe.
With due consideration to our return objectives, within
client lifestyle investments we will be biased towards
protection of capital even if this means giving up
potential excess performance.
Risk is multi-dimensional, but with the main
focus being on seeking to minimise the extent
and probability of a negative return
We will use multiple definitions of risk when specifying
objectives and determining investment strategy.
However, for client’s lifestyle investments, the main
definition of risk will be the likelihood and size of a
negative annual return.
Governance
High quality governance of the investment
process is critical to our success.
We should only invest in opportunities that we
understand.
Good governance within our portfolio assets is
important to creating sustainable investment
returns.
We will have an appropriate balance of responsibilities
and accountabilities between the board, the investment
committee, the internal investment team and external
agents. We will ensure resources are directed towards
areas with the greatest likely contribution to the
achievement of our objectives.
Not only do we expect good governance of ourselves
but also of our investment managers and service
providers. This includes exercising ownership rights,
including share voting rights, and requiring our
investment managers to research and engage, where
relevant, with portfolio investments to encourage robust
corporate governance and sustainable operations.
Investment Strategy
Investment markets offer long term rewards
for placing capital at risk (“risk premia”). The
size of risk premia vary over time, providing
opportunities to enhance return and reduce
risk by deviating from neutral positions.
Diversification amongst risk premia, asset
classes, investment managers and individual
securities is expected to reduce risk and
increase the reliability of returns, but will not
provide protection against all economic
We will make asset allocation decisions to exploit a
diverse range of risk premia on a systematic basis to
generate these rewards, and as far as possible, will aim
for these to have low correlations with one another.
We will be prepared to deviate from our neutral asset
allocations to reflect current market pricing and risk
levels. We will be more inclined to vary from our neutral
allocations to avoid capital loss than to pursue outsized
returns.
State Super Financial Services Australia Limited trading as StatePlus
ABN 86 003 742 756 | AFSL 238430
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STATE SUPER FINANCIAL SERVICES – INVESTMENT BELIEFS AND PRINCIPLES
scenarios
Our asset allocation (sector exposure)
decisions are expected to have the greatest
impact on investment outcomes
Successful investing requires consideration of
both quantitative and qualitative factors
Integrating environmental, social and
governance (ESG) risk factors into investment
strategy will improve the long-term, riskadjusted performance of the fund.
We will use both qualitative and quantitative analysis
when setting investment strategy and managing risk.
This will include our assessment of ESG risks in regard
to all aspects of portfolio management and will be
reflected in the approach to ESG issues applied by our
investment managers.
Liquidity
There is an expected return premium for
investing in illiquid assets
We will be prepared to invest in illiquid assets, provided
this does not compromise our ability to meet expected
cash flow requirements in all reasonably anticipated
circumstances.
Investment management
The main purpose of establishing investment
sector exposures is to provide access to our
desired risk premia
We will customise investment sector exposures to relate
specifically to the risk premia we wish to access. This
will include defining an appropriate benchmark and the
extent (if any) to which the exposure is permitted to
deviate from that sector’s benchmark.
Active management will be pursued to assist
in achieving higher returns, lower risk and
provide downside protection. It is difficult but
possible to identify suitable active managers
that would address our strategic needs.
We will only utilise active management in those asset
classes where we believe value can be added, and
where we have a high level of conviction in the
manager’s skill. We will be biased towards strategies
that are expected to outperform the benchmark in falling
investment markets.
Investment outcomes should be evaluated net
of fees, taxes and any other investment
charges or implementation impacts
State Super Financial Services Australia Limited trading as StatePlus
ABN 86 003 742 756 | AFSL 238430