The Fund’s investments are managed with a view to ensuring that the Fund will have sufficient liquidity to meet expected cashflow requirements.
The higher returns expected on shares and property assets will be sought by orientating investments towards these assets. Investment risk will be limited by appropriate diversification, both within and between asset classes.
A depressed investment environment may lead to a negative return on investments in any particular year. This could result in the value of members’ accounts falling in any particular year.
The Trustee does not invest directly in derivatives. However, the Trustee does permit investment managers to use futures, options and other derivative instruments to assist with the effective management of the Fund’s assets.
This includes using these instruments for the purpose of rebalancing to the investment options’ respective Strategic asset allocations and to provide currency hedging on international investment holdings within the Fund. The Trustee does not allow these instruments to be used to gear the Fund’s portfolio.
The Trustee expects that, over the long term, the use of these instruments will enhance the returns on the Fund’s assets. Over shorter periods, the effect on investment returns is expected to vary from year to year.
The Fund’s interest in any externally managed pooled fund shall not exceed 10% of the assets of that pool, unless a larger investment is specifically authorised by the Trustee.
No more than 20% of the Fund’s assets will be managed by any one external fund manager, unless specifically authorised by the Trustee.