Choosing an investment option (Investment choice)

Investment choice (or member investment choice) is a feature offered by most superannuation funds. Investment choice allows a super fund member to have a say over where his or her super fund invests his or her super money.

As a member of a super fund, you generally can choose from a selection of investment portfolios, such as balanced option, growth option, conservative option or cash option. Some super funds give you the option to invest in specific asset class options, such as a property option or Australian shares option (for a rundown on super investing, see SuperGuide article Superannuation investing: how does it all work?).

A balanced investment option can potentially have more than half of a fund’s assets in shares and the rest in property, fixed interest and cash. A balanced option often has a similar meaning as a growth option, but in some instances can be more conservative than growth. You need to check the underlying assets rather than rely on terminology.

Depending on the asset allocation, a growth investment option can sometimes be called the balanced investment option. True growth options generally have from 80% to 100% of assets in growth-style assets such as shares and property. A balanced option generally has from 60% to 80% in growth-style assets (for more information, see SuperGuide article Superannuation investment: What is the difference between a balanced and growth option?).

A conservative investment option is ordinarily, a low-risk investment option – a significant portion of the investments are placed in cash and fixed interest investments.

The default investment option is the option a fund chooses for those members who fail to choose an investment option. The default option is usually based on the age and risk profile of the average member of a super fund. The default investment option is invariably a balanced/growth investment option.

If you wish to switch investment options within your super fund, you need to complete a special form (see SuperGuide article Super control: How to switch your super account’s investment option).

Note: Investment choice is different to fund choice. If you want to choose or change super funds, refer to the special SuperGuide section Choosing a super fund (fund choice).

For more specific information about choosing investment options, refer to the SuperGuide links immediately below:

• Default investment option
• Understand your risk profile
• Benchmarking your super fund
• Switching investment options
• What are buy/sell spread costs?
• Hedged and unhedged international shares
• Responsible investing
• Retirement investment options
• SMSF investment