Balanced is not always balanced

For most people, the word ‘balanced’ means equally proportioned. In turn, when choosing how to invest our superannuation funds and we are given the option of a Balanced asset allocation, we would expect that the percentage of growth (risky) assets is equally proportioned to the percentage of defensive (safe) assets. After all, that would make sense right?

Unfortunately, when it comes to investing your super, Balanced is not always balanced and the label can be highly misleading. In many industry superannuation funds out there, your funds in a Balanced asset allocation are far more risky than the average person would reasonably expect.

Take Hostplus for example. Hostplus’ default invest option is ‘Balanced’. If you take a look at the underlying asset class exposures it has labelled 75% in growth assets and only 25% in defensive assets. That doesn’t sound very balanced to me!

Furthermore, to make matters worse, of the disclosed 25% defensive assets, 9% is invested in property, 6% in infrastructure, 5% in hedge funds and 5% in credit funds. Where I come from, none of those ‘defensive’ assets would even classify as defensive. They all have the potential to lose significant capital. This to me is 100% growth assets in a Balanced portfolio.

Hostplus then go on to boast some of the best investment performance in the 2017-18 financial year. This is highly misleading as they are pegging their performance against other Balanced funds which do hold truly defensive assets like cash and bonds.

I know I sound like I am picking on Hostplus a lot but they are just an example. There are many other industry super funds doing the exact same thing as Hostplus.

Here at Symmetry we remain true to label. If you invest in our Balanced fund, you will be getting 50% in growth assets and 50% in truly defensive assets. In a rising market this may mean we underperform some of the industry super funds ‘Balanced’ investments but in a falling market you will be far more protected.

If you want to take more risk in your portfolio you can, it just won’t be called ‘Balanced’. We also offer a Growth portfolio (70% growth / 30% defensive) and an Aggressive portfolio (90% growth / 10% defensive).

I will always endeavor to be as open and transparent in everything we do, including your investments. This is the only way to build a strong working relationship with our clients.