Nov 2000 Volume 81 Number 11 "serving the protectors"
Investment Performance for the Financial Year 1999-2000

Funds SA is a statutory body established under the Superannuation Funds Management Corporation Act 1995. Funds SA is responsible for the management and investment of the fortnightly employee (member contributions) and employer (SAPOL contributions) superannuation contributions to the Pension and Lump Sum Scheme Divisions of the Police Superannuation Fund and the Employer Contribution Account (SAPOL contributions).

Superannuation contributions (Employee and Employer) are invested by Funds SA in the following types of investments or asset classes and allocations:

• International Shares 38%
• Australian Shares 34%
• Inflation Linked Bonds 13%
• Property 8%
• Fixed Interest Bonds 5%
• Cash 2%

For the 12 months to 30 June 2000, Funds SA achieved investment returns (after fees) for the Pension and Lump Sum Schemes of 16.9% and 17% respectively. These results are in the top quartile of returns reported by the major Australian superannuation managers in 1999-2000. The following table shows the investment returns (after fees) achieved by Funds SA over the past five years.

PRIVATE INVESTMENT RETURNS

SCHEME	1996	1997	1998	1999	2000
PENSION	7.2%	20.6%	12.8%	9.5%	16.9%
LUMP SUM	6.3%	20.2%	12.0%	10.3%	17.0%

Funds SA’s approach to investment focuses on diversification by spreading investments over a broad range of asset classes as shown above. The choice of the strategic asset allocation is the key driver of long-term investment performance as experience shows that the strategic asset allocation accounts for about 80% of the investment return of a fund.

Further diversification is achieved by allocating funds to a range of specialist fund managers carefully selected for their different and complementary investment styles. As at 30 June 2000 Funds SA had contracts with 17 major external fund managers.

Funds SA does not take short-term, tactical views on the performance of the different asset classes, but instead focuses on long-term asset allocations designed to produce superior returns within the agreed risk profile.

Full details on Funds SA’s investment strategy can be obtained by contacting Funds SA by phone (8204 2355), fax (8204 2366), Web site (funds.sa.gov.au) or e-mail (ceo@funds.sa.gov.au).

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