October 1999 Volume 80 Number 10 "serving the protectors"
Police Super Update
By Michael Hogg

How are my contrubutions to the Police Superannuation Fund invested? What was the investment performance and returns for 1998/99?

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:

• Australian Shares 34%
• International Shares 33%
• Property 8%
• Fixed Interest Bonds 8%
• Inflation Linked Bonds 15%
• Cash 2%

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 chosen for their different and complementary investment styles. As at 30 June 1999, Funds SA had contracts with 17 major external fund mangers including Rothschild, Macquarie and Schroders.

For the 12 months to 30 June 1999, Funds SA achieved investment returns (after fees) for the Pension and Lump Sum Schemes of 9.5% and 10.3% respectively. These results are in the top quartile of returns reported by the major Australian superannuation managers in 1998/99. The following table shows the investment returns (after fees) achieved by Funds SA over the past five years.

PRIVATE INVESTMENT RETURNS

SCHEME	1995	1996	1997	1998	1999
PENSION	4.3%	7.2%	20.6%	12.7%	9.5%
LUMP SUM	4.9%	6.3%	20.2%	12.0%	10.3%

Full details on Funds SA’s investment strategy can be obtained by contacting Funds SA on: Ph: 8204 2355 Fax: 8204 2366

Web Site address: www.funds.sa.gov.au

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