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Here at Qantas Super, our members are at the core of everything we do. That’s why we like to regularly ask for your feedback about the products and services we provide you.

The last time we asked for your thoughts, we got some interesting responses that we think call for some mythbusting.

Why can’t super funds invest only in Australia and keep money in the Australian economy?

While we can appreciate the sentiment of wanting to support Australian companies and industry, there are a couple of reasons why super funds can’t invest solely in Australia.

The first is the need to diversify our investments – essentially, not putting all of our eggs in the one basket. Here at Qantas Super, this is core to our ‘Safety-First’ approach to investing: we invest for the long term, building well-diversified portfolios with investments that complement each other.

This means that your super is invested across over 5,000 investments globally, which in addition to shares, also includes property, infrastructure, timberland, agriculture, a variety of bonds, and cash. Having your super spread across these different types of investments is designed to help smooth the ups and downs that may be experienced by any one category of investment and allow your super to keep performing in the long-term.

One of the other practical reasons that super funds need to invest outside Australia is that the amount of money in the super system is simply growing to be too large for local investment.

For example, all of the companies listed on the Australian Securities Exchange (ASX) had a combined market capitalisation of $2.3 trillion as of June 2022. Meanwhile, statistics from the Association of Superannuation Funds of Australia (ASFA) found that superannuation assets totalled $3.3 trillion at the end of the June 2022 quarter.

Depending on the option you’re invested in, your super will have a solid exposure to Australia. For example, almost half of our Growth option, or the Altitude stage in our Glidepath option, is invested in Australia across Australian Equities, Private Equity, Infrastructure, Timber, Agriculture, Property, Government bonds, Cash and more.

Why are you focusing on climate change instead of returns?

A few responses to our survey earlier this year indicated that some members are worried that Qantas Super will sacrifice returns as we pursue our goal to achieve net zero carbon emissions across our investment portfolio by 2050. This couldn’t be further from the truth – our key focus has always been, and will always remain, ensuring we deliver strong investment returns for our members.

In fact, it’s exactly for this reason that we embedded sustainability as one of our core investment beliefs in 2015, and began incorporating environment, social, and governance (ESG) factors into our investment strategy.

We believe that these factors have a significant role to play in investing: we believe that they can not only impact investment risks and returns, and on the other hand, contribute to our ability to deliver sustainable growth for the benefit of our members.

Our analysis shows that there is a risk to members of negative returns in both the short and long term if we don’t act to mitigate climate risk. At the same time, this analysis also found there are potential opportunities to create value for our members if transitionary action is taken to make our investment portfolios more sustainable from a climate risk standpoint. This does not mean moving away from certain investments from day one, but rather transitioning over time as the landscape and market change.

For example, let’s look at natural gas. This is what’s considered a ‘bridge fuel’ during the energy transition from dirty fossil fuels, such as coal, to renewables; this means it’s considered cleaner than coal, as its carbon footprint is lower. Because of this profile, natural gas could currently be considered a strong investment.

At the same time, with renewable sources of energy expected to continue to grow over the coming years and decades, now may be a good time to explore investments into companies working on renewables, such as rooftop solar businesses.

Investment fees are too high

We know no one likes paying fees, and some members have been questioning some of the figures on their Annual Statements this year – you may have noticed, depending on the options you’re invested in, that your investment fees were higher this year than they were last financial year, despite receiving a lower return.

We know that’s confusing, so here’s a look at how those types of fees work.

A performance-based fee is a payment made to an external investment manager when they generate positive returns over and above a specific return target set for them. In short, it is a reward for delivering strong investment returns for our Plan.

Qantas Super invests in a range of different asset classes, including listed markets, private markets and fixed interest products.

Over the 2021/22 financial year, which was a very challenging year across global investment markets, our private equity portfolio and various other private market investments performed very well, leading to Qantas Super delivering positive returns for the year. In fact, the works by our investment managers meant Qantas Super was one of just three funds to deliver positive returns to members over the 2021/22 financial year.

The private equity space is one asset class where Qantas Super incorporates performance-based fees. So, had this particular asset class not performed so well, this type of fee would have been lower, but in turn, returns would have also been lower.

Meanwhile, the 2020/21 financial year saw listed markets and fixed interest perform better overall than the private equity space. Performance-based fees for these types of asset classes are lower than those for private equity, which meant lower performance-based fees paid despite the strong returns delivered over 2020/21.

Qantas Super takes a value for money approach to investing; we look to manage the higher costs of investing in private markets, for example, by ensuring that listed investments such as listed equities and government bonds are managed in a cost-efficient manner, typically without the use of performance fee arrangements.

We launched a new investment option, Thrifty, for our fee-conscious members on 1 July 2021. Thrifty is invested in a diversified mix of low-cost growth and defensive assets across listed equity and fixed interest products. Due to this passive investment strategy and lack of exposure to private markets it incurs lower costs than our other investment options.

It’s important to remember that the returns you see on our website and on your statement are net of investment fees and tax.

Qantas Super is owned by an American company

We have to admit, we did have a little chuckle about this one.

Qantas Super is a subsidiary of the Qantas Group. We were founded in 1939 to recognise employees, with Qantas chairman Fergus McMaster saying, “The company has always recognised the value of its Employees’ services by endeavouring to make working conditions as congenial and remunerative as possible…now…this recognition goes beyond the field of active service to provide for your years of retirement.”

While we are a subsidiary of the Qantas Group, Qantas Super has its own Board of Directors – this Board is made up of five company-appointed directors, and five member-elected directors.

Our office is based at Qantas’ Mascot Campus, and our Super Advisers travel to bases around Australia to provide help and advice to members face-to-face.

Qantas Super’s Advice team.

You can learn more about Qantas Super’s 83-year history here.

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