The Australian Scholarships Group Friendly Society (ASG) has launched two new education funds, enabling investment in fixed interest securities for the first time.
The funds will still allow investment in Australian and international equities as well as property. The fixed interest component of the funds, that will allow investment in Commonwealth bonds, treasury notes, bank bills and mortgages, will be managed by State Street.
The projected gross return rate for new funds, using a conservative, balanced approach, will be 8 per cent per annum, the society says.
The funds are unit-based thereby avoiding large solvency reserves which can adversely affect credited returns in fast-growing funds.
“Our members tell us frequently that they have no wish to gamble with their children’s futures,” says ASG managing director Terry O’Connell.
“They want us to provide secure rather than speculative returns and for this reason we are taking a conservative approach to investing their funds in equity markets.”
O’Connell says the society is looking for higher returns, but in a balanced risk environment.
“It is a big step for ASG as a friendly society to change the nature of its investments, but we believe that our new approach will meet the needs of our members and provide better allowances and reimbursements to help their children’s education,” he says.
The new funds are the Tertiary Program, which is designed for children undertaking further study, and the Secondary Schooling Program covering that part of a child’s education.
ASG hopes the new funds will boost its fund under management by a further $1 billion in the next eight years. Currently, the society has $870 million of funds under management and more than 300,000 members.
