PSS Fund Performance for August 2006
Welcome to the monthly update on your Fund's investment performance.
The impact of investment performance on your final benefit varies from minimal if you are a contributing member to significant if you are a preserved benefit member or if you have transferred amounts from other funds. However, all members may find it useful to understand how your fund performs.
ARIA's primary responsibility is the management and investment of the PSS Fund in the equitable and best interests of all members. ARIA approaches this task by setting an investment objective to maximise the real returns earned on investments subject to a tolerable level of short-term volatility.
PSS default Fund
Table 1: Asset allocation as at end August 2006 (%)
| Asset Class | Allocation |
|---|---|
| Australian shares | 32 |
| International shares | 23 |
| Long/Short equities | 5 |
| Property | 12 |
| Total Growth Assets | 72 |
| International Bonds | 13 |
| Market Neutral | 10 |
| Cash | 5 |
| Total Defensive Assets | 28 |
| TOTAL | 100 |
Table 2: The PSS in 2006-07 as at end August 2006 (%)
The return numbers in the table below are after fees and before tax, except for the Total Fund return number which is after both fees and taxes. Benchmark numbers are before fees and taxes.
The asset class sector benchmark return numbers show the market performance of the sector while the fund return numbers show what your Fund's performance was in that sector.
| Asset Class | Fund Return July-August 2006 |
Benchmark Return July-August 2006 |
|---|---|---|
| Australian Equity | 0.9 | 1.1 |
| International Equity | 2.4 | 3.3 |
| Long/Short equities | 0.8 | 2.6 |
| Property | -1.6 | 0.9 |
| International Bonds | 1.6 | 2.8 |
| Market Neutral | 1.5 | 1.6 |
| Cash | 1.0 | 1.0 |
| Total Fund | 1.0 | 1.9 |
Table 3: Historical Fund Returns over the last 5 years (% p.a.)
| Year | Return |
|---|---|
| 2001-2002 | -5.7 |
| 2002-2003 | 2.9 |
| 2003-2004 | 14.2 |
| 2004-2005 | 13.9 |
| 2005-2006 | 13.1 * |
* unaudited
Commentary:
International equity markets have started the new financial year strongly, taking heart from an apparent peaking in US interest rates. Australian equities have been more mixed with a weak July more than offset by a bounce in August.
Global fixed interest markets have also benefited from the plateauing (for the moment at least) in US interest rates. The Fund's property return was affected by a write down in the value of a major asset by one of the managers and by some acquisition costs involved in taking the under-weight property exposure closer to benchmark weight.
The after-tax return for the two months of 1.0% was below the benchmark return of 1.9%.
PSS Cash Investment Option
Table 4: The PSS Cash Investment Option in 2006/07 as at end August 2006 (%)
| Fund Return July - August 2006 |
Benchmark Return July - August 2006 |
|---|---|
| 0.9 | 1.0 |
Table 5: Historical Fund Return (%)
The Fund return in the table below is after fees and tax.
| Year | Return |
|---|---|
| 2004-2005 (7 months to June) | 2.8 |
| 2005-2006 | 4.8* |
* unaudited
Commentary:
The Cash Investment Option continues to deliver returns in line with the benchmark return once account is taken of fees and taxes.
Andre Morony
CIO
22 September 2006
