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Investment Returns

RBF announces a 5-year return of 8.76% pa to 30 June 2008*

*RBF Investment Account's default option, RBF Actively Managed.

Our carefully planned investment strategy will continue to protect members from as much of the market volatility as possible while maintaining a strong long-term investment focus.

As the saying goes "what goes up must come down". For the past few years investment returns from the share market have been unusually high, both here and overseas. So high in fact, that most industry experts predicted the current down turn. The market volatility we are currently experiencing is primarily due to uncertainty with the US economy following the sub-prime crisis.

While short term returns may seem worrying, it is important to remember that super is a long-term investment. Each Member Investment Choice option has a specific time frame in which an average return can be expected. Most of our Member Investment Choice options have a time horizon of five years or more. This is the time we expect each option will need to show an average return.

RBF's asset consultants, JANA Investment Advisers Pty Ltd provide a regular market commentary to help members understand why the markets are nervous and how RBF's investments are positioned.

Serving Tasmanians for more than 100 years, RBF staff are available to help you make informed decisions and understand your super.

Typical member questions are answered below or you can read more about Informed investing.

Questions

Answers

When will the markets return to normal?

What we are currently experiencing with the global market is normal share market behaviour.

History tells us that events such as these are cyclical and the market will continue to experience peaks and troughs.

Over the past five years up to 31 December 2007, investors in Australian shares had enjoyed returns in excess of 20%p.a. Losses have occurred since then but do not detract from the substantial gains made over the past few years. Investing remains a long term pursuit, and shorter term market movements, while they feel significant, are not good indicators of longer term performance.

As to when this trough will end - it is impossible to accurately predict movements in the market. If investing were that simple, we'd all be rich. RBF cannot say if the markets will go lower or when they will start to recover.

Members should choose an investment strategy to suit their needs and reflect their personal risk tolerance. Very few people profit from chasing the "best investment". Negative returns are expected in almost all asset classes from time to time. This is a normal part of investing.

Have I lost money?

Your RBF Investment Account or RBF-TAS SG Account balance may have dropped. Unless you have withdrawn your money, your funds will continue to receive investment returns. As investment returns improve, so will your account balance.

Superannuation is a long term investment. Even if you retire and commence an RBF Allocated Pension, it is likely you will have that money to invest for up to 20 years or more to pay your pension going forward.

Generally, investment returns do not impact on benefits from the RBF Contributory Scheme.

Should I change my Member Investment Choice options?

If you're uncomfortable with your current risk exposure, you may want to reassess how your money is invested. But remember, it's probably more dangerous to move investments without researching the alternatives than to keep your current investments. Contact RBF to discuss your MIC options.

History tells us that events such as these are soon absorbed by long-term trends. For example, everyone thought the market drop related to the September 11 events were significant and many investors chose to move to more conservative options. Those who stuck with their long-term plan recovered along with the market within a matter of months. Investors who changed their investments did not receive the benefits of that market recovery.

Consider your attitude to current market movements along with your long term goals when selecting your investment choice. Not just now, but at all times.

A good financial plan should suit your needs and reflect your personal risk tolerance. That way you'll be prepared for market volatility, even though you don't welcome it.

How is RBF prepared for negative markets?

When investment markets are performing poorly, RBF's overall investments are positioned to offer more relative downside protection for our members.

Our investment strategy protects members from as much volatility as possible while maintaining a strong long-term investment focus.

What is diversification and why is it important?

Different markets perform differently at different times. In simple terms, diversification is 'not putting all your eggs in one basket'. Informed investing means that you won't have all your money on the best performer but will achieve some protection when they have poor returns.

Strategies for achieving diversification are:

  • Investing across a range of asset classes;
  • Using a number of investment managers with different investment styles;
  • Holding different investments or shares within each asset class.

RBF's MIC options are specially designed to provide various degrees of diversification. Members who choose to hold investments in single asset class options such as RBF Australian Shares will still achieve some diversification through multiple investment managers within the option, each with different methods of selecting their individual range of shareholdings. Members choosing single investment management options will achieve a degree of diversification through asset classes and/or share or stock holdings.