Distribution of all investments
Overall 34.6% of the fund assets are invested in a high-risk portfolio and 31.8% are invested in a medium-risk to high-risk portfolio.
This graph below illustrates the distribution of investment risk, by age, according to the risk ranking of a member’s investment portfolio.
In 2019, most members under 55 remained fairly aggressively invested, but more than 10% chose a portfolio with no equity exposure. About 40% of members chose portfolios with less than 50% exposure to equities. It is important for members with a long-term investment horizon to invest in sufficient equities, since these are expected to outperform bonds and cash over the longer term and will be a critical contributor to a member’s retirement benefit. The compounding effect of a few percentage points return over a 40-year lifetime can result in as much as a 50% higher benefit at retirement.
Almost 80% of members between the age of 20 and 30 are invested in medium-risk to high-risk portfolios, which is sensible since they are 30 or more years away from retirement. Almost 30% of members above the age of 60 are invested in medium-risk to high-risk portfolios. This shows the preference that members (especially those with higher fund credits) have for investing in living annuities when they retire and typically staying invested in a higher risk portfolio for longer.