Leading the way in alternative investments

At a time when uncertainty is particularly elevated in the macroeconomic and investment environment, profit-to-members super fund Prime Super is delivering very strong risk adjusted returns while maintaining a cautious outlook.

The Fund engages investment adviser, Whitehelm Capital to advise on the more than $3 billion Prime Super looks after for its 120,000 members and CEO Lachlan Baird says that has been one of the keys to the Fund’s success.

“The change in approach and restructuring of the portfolio around seven years ago is delivering strong risk adjusted returns. And while the strong returns are pleasing, we are particularly happy with our very strong risk adjusted returns achieved with lower levels of volatility than most of our peers,” said Mr Baird.

For the twelve months ended 31 December 2016 Prime Super’s MySuper investment option returned an impressive 9.28% - a return that would see it ranked among the top five on the SuperRatings 50 Balanced Index, and in the top seven funds according to the Chant West survey of balanced super funds.

“Prime Super is defensively positioned, holding higher than normal levels of defensive assets to take advantage of opportunities as they present themselves. The restructuring of the portfolio and the changed approach to asset allocation has delivered better risk adjusted returns to members over the medium and longer term,” said Mr Baird.

The Fund’s MySuper option delivered a top quartile return over the three, five and seven year periods, when compared with the SuperRatings 50 Balanced Index Survey.

“The macroeconomic outlook is uncertain as we see a sweeping populist uprising with new leaders in a number of developed countries and further changes of leadership likely as countries go to the polls. Interest rates of most major central banks in the world are the lowest in living memory which has in turn increased valuations of all asset classes, some considerably,” said Mr Baird.

Alternative asset classes have played a significant role in Prime Super’s positive returns, particularly infrastructure and property.

For the three years to December 2016, Prime Super’s Alternatives and Property investment options generated returns of 13.96% and 19.33%, respectively – an outstanding result both in absolute terms and relative to the market.

“Navigating through these challenging conditions is front of mind and we remain both cautious and steadfast with our investment discipline. This has resulted in some divestment activity in recent years and adjusting the asset allocation to reflect our investment environment outlook,” he said.