Investment Options
IRP
Investment Managers
IRP funds are invested with appointed specialist
investment managers selected for their expertise and recognised
performance in their specific investment sectors. This means
that the Plan, and you as a member, don’t have “all
your eggs in one basket”.
As
at 1 October 2007 there were six appointed managers across
eight different investment sectors:
NZ
Cash - ING (NZ) Limited
NZ Fixed Interest - Tyndall Investment Management New Zealand
Limited
Trans Tasman Shares (active) - Brook Asset Management)
Limited
NZ Property - AMP Capital Investors
(New Zealand) Limited
International Property - AMP Capital Investors (New
Zealand) Limited
Overseas Fixed Interest - PIMCO(Australia) Pty Limited(accessed viaTower Asset Management)
IRP Diversified Funds
The IRP offers a choice of three managed investment funds
(Stable, Balanced and Growth), which provide diversification
across each of these asset classes or investment sectors.
It is important not to have all your investments in the one
type of asset, for example: shares, property, fixed interest,
cash. You need to have a "diversified investment portfolio"
of assets to protect you against downturns in any one asset
class.
This way by investing in a managed portfolio you should be
able to maximise your return over the long-term, whilst reducing
risk. By risk we mean the volatility of your investment portfolio,
that is, the degree of ups and downs in value it will have
over time. Generally the risk and return involved in each
type of investment can be summarised by:
|
|
|
|
 |
|
Lower
risk/lower return |
Higher
risk/higher return |
IRP
Investment Strategy
Stable
Fund
Lower
risk = lower return
- Medium
to long-term investment.
- Long-term
expected net returns per year over a five-year period
(after taxes and fees), average 1% above the return from
cash in the bank (as measured by the 90 Day Bank Bill
rate less 33% tax).
- High
proportion invested in fixed interest (bonds) and cash.
- Low-risk
portfolio - low volatility, more consistent return over
time, no spectacular returns.
| Investment Sector |
Benchmark
% |
NZ
Cash
NZ Fixed Interest
Trans Tasman Shares
International Fixed Interest
International Shares
|
40
8
6
3.2
14
|
Balanced
Fund
Moderate
risk = moderate returns
| Investment Sector |
Benchmark
% |
NZ
Cash
NZ Fixed Interest
Trans-Tasman Shares
NZ Property
International Property
International Fixed Interest
Active International Shares
|
10
8
12
4
6
32
28
|
Benchmark Strategy
Growth
Fund
Higher
risk = higher return
- Medium
to long-term investment .
- Long-term
expected net returns per year over a five-year period
(after taxes and fees), average 3% above the return from
cash in the bank (as measured by the 90 Day Bank Bill
rate less 33% tax).
- High proportion invested
in New Zealand and overseas shares and property,
small amount in fixed interest and cash.
- Higher-risk
portfolio - greater volatility, returns can fluctuate
dramatically, potential for high returns over time.
| Investment Sector |
Benchmark
% |
NZ
Cash
NZ Fixed Interest
Trans-Tasman Shares
NZ Property
International Property
International Fixed Interest
Active International Shares
|
5
4
18
4
11
14
42
|
Benchmark Strategy
How
to Choose Which Fund
You
can choose from three Managed Funds, each with an increased
level of risk:
This
gives you the flexibility to decide on an investment strategy
that best suits your own individual financial needs, objectives
and your changing circumstances.
Suitable for investors looking for
Stable |
- Consistent shorter-term returns
|
Balanced |
- Medium
term investments with potentially higher returns
than from the Stable Fund
- Willing
to accept some variability in return
|
Growth |
- Long-term
investments with potentially higher returns than
from the Stable or Balanced Funds
- Willing
to accept reasonably variable returns in the short
term
|
Different
people have different investment requirements and objectives.
Some people are happy to accept an increased risk of a negative
return in exchange for potentially better long-term returns.
Others prefer to accept the likelihood of more modest returns
over the longer term in exchange for the comfort of a reduced
risk of a negative return. Those with shorter time horizons
may not be willing to accept the possibility of greater
volatility in investment returns and therefore choose to
adopt a more conservative investment mix.
Investors need to decide which investment objectives are
the most important:
-
If
they want high returns, investors will need to be comfortable
with increasing risk in an environment of expected lower
market returns.
-
If
they want to avoid negative returns, they’ll need
to consider a more defensive strategy.
We can't
advise which Fund you should choose, because it depends
on your needs. But we can give you some pointers. The Retirement
Commission's Sorted website has a lot of really good
information to help you work through what types of investments
suit you best - check out the investing section www.sorted.co.nz/investing_index.php.
You might also like to complete one of the questionnaires
designed to help you determine what your risk profile is www.sorted.co.nz/yourinvestpro.php
Then
you might like to speak with an independent professional
financial adviser for one-to-one help. The Retirement Commission
has put together a really useful checklist for financial
advice, to make sure you ask all the right questions when
seeking advice. You can print it off right here: sorted.co.nz/rightadvice.php
Think
about:
- Timeframe - how long are you going to invest for? In
most cases the longer you want to invest, the more risk
you can afford to take to obtain a higher return. If
you are close to your retirement, you may be more comfortable
with a lower risk investment.
- Risk
tolerance -
can you take it? Generally
the higher the potential for capital return, the higher
the risk. The higher the risk the more likely the results
may sway between negative and positive returns from year
to year. In the long term (10 years plus), these generally
balance out in favour of a more profitable return than
lower risk investments. In the short term, can you handle
receiving a negative return in one year?
- Other
assets - if
your only asset is your retirement fund, you may feel
more comfortable with a lower risk portfolio. However,
if you have other assets, such as an investment in shares
and a freehold house, you may be able to take more risk.
Changing
Your Choice of Fund
IRP
is a long-term investment - so your investment needs will
probably change at some stage during your membership. That's
why the trustees built the IRP to be flexible to meet your
budget, earnings and lifestyle at any stage of your life.
You
can invest in one or all three Funds.
We
recommend you reassess your IRP investment choice from time
to time. This is particularly important as you approach retirement.
You have two ways to change:
- Once a year at no cost to you, you can
redirect your future contributions to a different Fund
- Any time for a $40 fee per transfer, you
can move a portion (or all) of your savings from one Fund
to another. NB: the first transfer made in a plan year
(1 July – 30 June) is free and thereafter further
transfers made during the plan year will incur the $40
fund transfer fee.
You
can now change your choice of investment fund on-line right
here through the “Current
IRP Members” section. This will link you directly
to the IRP Administration Manager's (Jacques Martin) website
for the Plan and your details on the administration system.
To change your investment fund you will need to sign into
the website with your IRP personal member contract number
and password.
Or alternatively, just fill out the Investment
Alteration Request form and send it to: Jacques
Martin New Zealand Limited, PO Box 606, Wellington.
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