Glossary

It's important to understand all aspects of your investment.  Statewide can help you understand some of the terminology that we use when referring to our investment options.  Please refer to the Glossary of Terms below.

ASSET CLASSES are terms used to describe different types of assets. Examples of asset classes include Australian Equities, Property, Cash etc.

ALTERNATIVE EQUITIES include infrastructure and venture capital types of investments. Infrastructure investments can include investments in roads, power generation and distributions and water sewerage treatment plants. Venture capital is the investment of funds to further develop a business.

CASH ENHANCED includes cash deposits, term deposits, bonds and Commonwealth Securities.

DEFENSIVE ASSETS include cash, fixed interest, income securities, bonds and debentures. These types of assets tend to achieve long term rates of return but usually have less risk of loss of investment associated with them.

FIXED INCOME/INTEREST investments such as bonds and debentures pay a fixed level of income at nominated dates in the future. Bonds are loans made to government bodies and debentures are loans made to companies. Fixed Income investments normally offer a moderate level of risk and return.

GROWTH ASSETS include shares and property. These types of assets tend to provide higher returns in the longer-term but with a higher level of risk.

HEDGING refers to the process of protecting investment capital, by using another type of investment to cover all or part of the original investment from potential adverse movements in the market. For example, one could use options, futures, swaps or other hedge instruments to protect the A$ value of a portfolio of US shares, against possible depreciation of the US$ relative to the A$. Under such circumstances, hedging activity is a legitimate aspect of prudent financial and investment management. Undertaken on its own, use of such instruments would more correctly be considered to be speculation in derivatives. Statewide's investment policy permits hedging but does not allow speculation.

INFRASTRUCTURE INVESTMENTS typically are placed in existing facilities such as toll roads, airports, ports, and electricity/gas distribution systems, although sometimes the investment relates to the development of new assets. They generally deliver regular income streams that represent high cash yields over long durations. Infrastructure investment returns are generally low in volatility and are well insulated from inflation, as they usually have monopoly pricing characteristics and enjoy relatively well-established levels of public patronage.

INVESTMENT OBJECTIVES are the outcomes or results the Trustee wishes to achieve with regards to its investments within a given period.

INVESTMENT OPTIONS are the investment choices offered by Auswide to members.

PROPERTY INVESTMENTS include investments in office buildings and shopping centres. Returns can be generated from rental income and movements in the value of the property. The returns are normally more variable than cash or fixed income and is regarded as a moderate to high risk investment.

RETURN is the amount of money or interest received from an investment or changes in the market value of that investment. It is usually expressed as a percentage.

RISK is the variability of returns. Investments such as cash have a low risk because the return will vary within a small range, whilst investments such as shares have a greater risk due to the large degree of variability in returns.

SHARES which are also known as equities, represent ownership of part of a company. Returns from shares are generated through dividends and the potential for profit or loss through changes in the share price in the share market. Shares generally provide a higher return than cash, fixed interest and property, over the long-term, but also involve a higher risk and greater fluctuation of returns on a yearly basis.

A superannuation TRUSTEE is responsible for looking after a superannuation fund for the benefit of the members. The trustee is legally responsible for managing the fund in accordance with the Fund's Trust Deed.