SSFS upping cash/alternatives allocation
State Super Financial Services (SSFS) is pushing more money into cash and alternatives in an effort to reduce risk in clients’ portfolios.
With a growing proportion of its clients approaching retirement, SSFS chief investment officer Damian Graham said it became critical to minimise volatility.
“We seek to improve outcomes by choosing investment products which work together to deliver returns within a comprehensive risk management framework,” he said.
As part of the new risk management strategy, SSFS has placed $200 million in alternatives and directed $300 million into the Perpetual Investments’ Enhanced Cash Strategy to offset capital losses in the share market.
“This kind of risk mitigation is crucial to our investors approaching retirement,” Graham said on the alternatives allocation.
Noting the low-return history of cash and alternatives, Graham said SSFS had developed a new strategy to capitalise on returns on the assets while minimising the impact of interest rate rises.
“Enhanced Cash invests in cash-like securities in order to provide a return above that of cash by taking incremental additional risk.
“It sits between cash and fixed interest in the risk/return and liquidity spectrum, and the generally floating rate return generated helps provide a degree of protection against inflation and assists with income generation,” Graham said.
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