New investment option – Indexed Balanced
A new low cost, no–frills investment option is now available to members, with the introduction of the Indexed Balanced option on 1 July. Everyone from billionaire Warren Buffet to the Barefoot Investor, Scott Pape, has talked about indexed investment options, but what are they and are they right for you?
What is an indexed investment
An indexed investment is passively managed, investing by certain criteria to mimic another investment strategy but without the active decision making. For example, you can invest in an index for the ASX200 – you'll be invested in whichever companies are in the ASX200 at any particular time, with the composition only changing if the companies in the ASX200 changes.
How Media Super's Indexed Balanced option compares
Indexed balanced funds are invested in a mix of asset types, but are less diversified than a traditional balanced option, aiming to provide a moderate investment return. Media Super's Indexed Balanced fund is one of the more diversified low cost options available, as it includes investments in emerging markets equities, listed property and listed infrastructure.
The Barefoot Investor has suggested using a low cost indexed option to achieve what he refers to as an "SMSF Lite" strategy – low cost with ultimate control. By combining an indexed option with a direct investment product, you get the best of a self–managed super fund (the ability to directly invest in shares) and the best of a traditional super fund (low compliance costs and hassle). Media Super members can achieve this by combining the Direct Investment option with the new low cost Indexed Balanced option.
Thinking of changing investments?
Everyone's investment needs are different based on your age, financial circumstances and comfort with risk. The Indexed Balanced option may be a great low cost option for some members, especially if paired with Direct Investment, but may not be the right risk/return mix for other members.
Before you make a decision to change it's a good idea to give our Helpline* a call on 1800 640 886 and talk through your options and any questions you may have.
* Helpline Advisers providing general or limited advice are representatives of Mercer Outsourcing Australia Pty Ltd ABN 83 068 908 912, AFS Licence 411980.