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Diversified growth strategies

Australians looking to increase their super fund’s annual returns may benefit from shifting to a diversified growth strategy.

A diversified growth strategy is a multi-asset program that invests in a range of traditional and non-traditional return sources to achieve a defined outcome.

A recent study has shown that including a 15% allocation to a diversified growth strategy in a typical super portfolio could increase the fund’s realised returns, lower its overall volatility and improve its risk-adjusted returns.

The role that a diversified growth strategy could play within a fund depends on the nature of the investor. For example, super funds with a high level of control may not necessarily need for the strategy as a portfolio diversifier. However, these kinds of super funds may benefit from idea sharing with an investment manager to facilitate more agile management of the portfolio.

Some investors have recognised the role that diversified growth strategies can play in helping to meet their objectives, with the market now attracting around $230 billion of funds globally.

Diversified growth strategies have sparked some interest from some Australian super funds and could be well placed to meet growth return objectives while also providing investors with the confidence that they can achieve desired outcomes.

Posted on 8 September '15 by , under Super.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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