Our super & investment glossary can help you understand some of the super and investment terms we use
Assets. In investment terms, assets are investments used to gain a return. Assets are generally described as growth or defensive. They are also divided into asset classes such as cash, fixed interest, property, unlisted assets and shares. Find out more.
Asset allocation. This means the spread of investments within an investment portfolio. As part of the strategy of the portfolio, the assets should balance with each other to achieve the stated goal.
Asset classes. Assets are divided into asset classes such as cash, fixed interest, property, unlisted assets and shares. Find out more.
Benefit. There are a number of benefits you may receive, subject to meeting the applicable criteria, but when we’re talking about superannuation we mean your ‘retirement benefit - which is your super balance payable to you when you retire permanently from the workforce, having reached your preservation age (see further below for definition). Your balance may also be paid to you if you leave your employer after age 60 irrespective of whether you are retiring permanently from the workforce. Once you attain age 65 you can access your super funds even if you have not yet retired from the workforce. Retirement benefits are paid as a lump sum. Under current law, you may retain your benefits in HOSTPLUS until your death at which point benefits will be paid (as a lump sum) to your dependants or legal personal representative.
Custodian. An independent organisation that safeguards the fund’s assets. There are comprehensive rules governing who can issue instructions to the custodian, in particular how money can be released to investment managers.
Declared net fund earning rate. The declared net fund earning rate is based on the actual investment performance data for the previous week ending Sunday, less any applicable fees and taxation. However, for the last two weeks of June the declared net fund earning rate may not be finalised until 20 to 25 business days after 30 June. For the last two weeks of December, the declared net fund earning rate may not be finalised until 20 to 25 business days after 31 December. The declared net fund earning rate can be positive or negative depending on investment performance. A negative earning rate can result in a decrease in your account balance. Generally, updates of the net fund earning rates are published on our website on the third business day each week. Find out more about how and when earnings are allocated to your account.
Defensive assets. Defensive assets generally are lower risk (less chance of a negative return), with a corresponding expectation of lower returns over the longer term. A high proportion of their returns are derived from income (cash) flows. Examples include cash and some fixed interest investments. Asset classes, such as some unlisted assets (which can include infrastructure, property and alternatives) may have defensive characteristics.
Diversification. As the saying goes, it doesn’t pay to put all your eggs in one basket. The same is true for investing. The key to successfully managing risk is through diversification. Diversification means spreading your investments across a range of asset classes or types of investments so you have exposure to different market classes. This could help offset poor performance that may occur in any individual asset class. For example, if one asset class is not performing well, another asset class may be experiencing better returns helping to offset the losses of the poorer performing asset.
Emerging markets/countries. The financial markets of developing countries are known as ‘emerging markets/countries’ and include nations like Mexico, Malaysia, Chile, Thailand and the Philippines. Emerging markets can be very volatile but have tremendous growth potential.
Growth assets. Growth assets generally provide relatively higher returns over the longer term with a corresponding higher level of risk (increased chance of a negative return and volatility). A high proportion of their returns are derived from capital growth. Examples include shares and some property investments.
ICR (Indirect cost ratio) or investment expenses. The annual percentage fees for managing your investment.Find out the ICR for each investment option in Section 5: How we invest your money in our Member Guide.
Inflation. Inflation is the increase in the general price level of goods and services in the economy. It is usually measured using the movements of the consumer price index (CPI).
Investment account. HOSTPLUS maintain an investment account for the sole purpose of temporarily holding investment earnings and paying investment related expenses until the net earnings can be allocated to members’ accounts during the 31 December or 30 June statement periods. HOSTPLUS does not use the investment account to smooth investment returns from one year to another.
Investment styles. Assets are invested using different investment styles. Find out more.
Portfolio. A portfolio is a spread of investments across the various sectors, managed as a whole to achieve a particular investment strategy.
Preservation age. Generally, your super benefits are preserved in a super or rollover fund until you retire from the workforce on/or after reaching your preservation age. Your preservation age will vary between 55 and 60 years of age, depending on your birth date. If you are born after June 1964 your preservation age will be 60.
Returns. Returns may include both the income received from the investment and an increase or decrease in the capital value of the investment.
Risks. All investments are subject to varying risks and can change in value. There are risks in choosing to invest in superannuation and each investment option has different risk characteristics and volatility.Risks can be divided into two main categories: investment risks and operational risks. Learn more.
Volatility. The short-term fluctuations in share prices, exchange rates and interest rates that affect an investment. The higher the volatility, the less certain an investor is of the return within a time frame and hence volatility is one measure of risk.