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Over the past few weeks there has been media commentary on cash investment options within super funds. To address the points covered and provide members greater insight into Vision Supers cash investment option we have provided this update.

 

The Funds cash portfolio is a diversified portfolio invested in a combination of different short term cash securities. It is managed in accordance with a strict policy.

The portfolio’s underlying investments are mainly term deposits maturing within 1 to 4 months. These are the safest cash investments in the market and have the highest seniority ranking in a company’s capital structure.

The portfolio also invests in Negotiable Certificate of Deposits (NCDs) and commercial papers (CPs) as alternate sources of investment and liquidity. A CP is a short-term unsecured debt security typically issued by blue chip companies. These investments have credit risk attached.  The portfolio is only invested with those CP issuers that have the highest credit rating and are within 2 month of maturity.

A NCD is a fixed deposit that is guaranteed by the bank (the issuer) and can be sold in a highly liquid secondary market. The portfolio has only up to 20% exposure to NCDs, mainly invested through domestic banks.

Lastly, the portfolio has at least 5% overnight cash investments (11am deposits) with one of the big 4 banks to provide day to day liquidity requirements for the fund.

All the money market securities are invested with issuers with at least an “Upper Medium Grade” rating with the majority invested with the big four Australian banks.

Performance for both the 2017/18 financial year and longer periods for all Vision Super options is available here.

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