Standard Risk Measure (SRM) for super investment options.

The Standard Risk Measure is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20 year period.

The Standard Risk Measure is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return.

Members should still ensure they are comfortable with the risks and potential losses associated with their chosen investment options.

Standard Risk Measure Methodology

The Standard Risk Measure for investment options is based on the 'estimated number of negative annual returns over any 20 year period'.

Risk bands of the Standard Risk Measures

Risk Band

Risk Label

Estimated number of negative annual returns over any 20 year period

Very Low

Less than 0.5

Low

0.5 to less than 1

Low to Medium

1 to less than 2

Medium

2 to less than 3

Medium to High

3 to less than 4

High

4 to less than 6

Very High

6 or greater

The calculation is based on FSC/ASFA Standard Risk Measure Guidance Paper for Trustees, July 2011

No adjustment has been made for the impact of active investment management.

BT has engaged the services of Lonsec to supply the SRMs across the full suite of superannuation funds under BT Financial Group (BTFG).

Lonsec Methodology

The cornerstone of the Lonsec Standard Risk Measure (SRM) model is the Lonsec long term asset class assumptions, which are reviewed annually. The assumptions used include the expected asset class returns and volatilities, cross correlations between asset classes, as well as long term inflation, GDP, and wage growth forecast. While these assumptions focus on the longer term (10 years+) horizon, the process does take into consideration the current market environment in determining these long term forecasts. Special attention was given to the treatment of fees in accordance with the APRA recommendation, where SRM should be calculated gross of administration fees but net of investment management fees. While Lonsec believes any ‘alpha’ generated from active management is more than sufficient to cover the investment management fees, inevitably the ‘passive’ component of investment management fees charged by managers are generally non-recoverable (in the absence of alpha). With that view, Lonsec applied a small ‘passive’ investment management fee to the long term asset class returns forecast, assuming any ‘alpha’ generated from active management will be offset by the ‘active’ investment management fees charged by the active managers.

For the purposes of the model, asset class assumptions are defined as the expected return and volatilities of passive strategies within each asset class, i.e. market benchmarks.

Single-asset strategies

The model determines the expected return and volatility of any single-asset strategy by identifying its historical market exposure and the volatility differential between the strategy and the market benchmark. The model computes the probability of negative returns in any one year by assuming a normally distributed probability function on the expected monthly returns and volatilities of these strategies. These were in-turn translated into an estimated number of negative annual returns over any 20 year period. For strategies that have the ability to invest into various sub-asset classes, or those that vary their sub-asset class allocations from time to time, the model determines a single (or multiple) market benchmark(s) which best reflected the historical return volatility profile of the strategies.

Multi-asset strategies

The model conducts a series of forward looking Monte Carlo simulations (50,000 scenarios) of multi-asset strategies based on their neutral asset allocation, and the expected return and volatility assumptions of the underlying market benchmarks. The model observes the number of negative annual returns within the simulation outputs to determine the probability of negative returns in any one year. Multiplying this by 20 to derive the estimated number of negative annual returns over any 20 year period. For strategies without a neutral asset allocation, the model determines the SRM based on their stated investment objectives, and where they would fit within the risk-return framework amongst other multi-asset strategies.

View the latest Standard Risk Measure for Investment Option(s) in your product(s)

BT Business Super

Investment Option Risk Band - Standard Risk Measure
Aberdeen Actively Hedged International Equities 6
Schroder Balanced 5
OnePath Blue Chip Imputation 6
Colonial First State Diversified 5
MLC Growth 6
Colonial First State Australian Shares 6
MLC Global Shares 6
Investors Mutual Australian Shares 6
Aberdeen Australian Small Companies 7
Macquarie Diversified Fixed Interest 3
BT Australian Sustainability Share 6
BT Multi-manager High Growth 6
BT Multi-manager Growth 6
BT Multi-manager Balanced 5
BT Multi-manager Conservative 3
BT MySuper 1940s Lifestage 2
BT MySuper 1950s Lifestage 3
BT MySuper 1960s Lifestage 5
BT MySuper 1970s Lifestage 6
BT MySuper 1980s Lifestage 6
BT MySuper 1990s Lifestage 6
BT MySuper 2000s Lifestage 6
Westpac Dynamic Growth 6
Westpac Australian Fixed Interest 3
Westpac Australian Shares 6
Westpac International Fixed Interest 3
Westpac International Share 6
BT Active Balanced 5
Westpac Australian Property Securities 7
BT Core Australian Shares 6
BT Core Global Shares 6
BT Partner Australian Shares Core 1 6
BT Partner Australian Shares Growth 1 6
BT Partner Australian Share Value 1 6
BT Partner International Shares Value 1 6
BT Partner International Shares Growth 1 6
BT Global Property 7
BT Partner International Shares Core 1 6
Westpac Moderate Growth 3
Westpac Balanced Growth 5
Westpac MoneyMarket 2

BT Classic Lifetime - Flexible Pension

Investment Option Risk Band - Standard Risk Measure
BT Active Balanced 5
BT Active Balanced NCF 5
BT Cash 2
BT Cash NCF 2
BT Conservative 3
BT Conservative NCF 3
BT Core Australian Share 6
BT Core Australian Share NCF 6
BT Diversified Share 6
BT Diversified Share NCF 6

BT Classic Lifetime - Personal Super

Investment Option Risk Band - Standard Risk Measure
BT Active Balanced 5
BT Active Balanced NCF 5
BT Cash 2
BT Cash NEF 2
BT Conservative 3
BT Conservative NEF 3
BT Core Australian Share 6
BT Core Australian Share NEF 6
BT Core Global Share 6
BT Core Global Share NEF 6
BT Diversified Share 6
BT Diversified Share NEF 6
BT Ethical Share 6
BT Ethical Share NEF 6
BT Imputation Share 6
BT Imputation Share NEF 6

BT Lifetime - Flexible Pension

Investment Option Risk Band - Standard Risk Measure
Colonial First State Australian Shares 6
BlackRock Balanced 5
MLC Growth 6
Colonial First State Australian Shares NCF 6
BlackRock Balanced NCF 5
MLC Growth NCF 6
BT Australasian Bond 3
BT Australian Share 6
BT International Share 6
BT Property Securities 7
BT Future Goals 6
BT Future Goals NCF 6
BT Balanced Returns NCF 5
BT Conservative Outlook NCF 3
BT Australian Share NCF 6
BT International Share NCF 6
BT Australasian Bond NCF 3
BT Property Securities - NCF 7
BT Cash NCF 2
BT Multi-manager Conservative 3
BT Multi-manager Balanced 5
BT Multi-manager Growth 6
BT Multi-manager Conservative NCF 3
BT Multi-manager Balanced NCF 5
BT Multi-manager Growth NCF 6
BT Cash 2
BT Conservative Outlook 3
BT Balanced Returns 5

BT Lifetime - Personal Super

Investment Option Risk Band - Standard Risk Measure
Colonial First State Australian Shares 6
Aberdeen Actively Hedged International Equities 6
Macquarie Conservative 2
BlackRock Balanced 5
MLC Growth 6
Colonial First State Australian Share NEF 6
Aberdeen Actively Hedged International Equities NEF 6
Macquarie Conservative NEF 2
Blackrock Balanced NEF 5
MLC Growth NEF 6
BT Australasian Bond 3
BT Australian Share 6
BT Global Bond 3
BT International Share 6
BT Future Goals 6
BT Partner Australian Shares Core 1 6
BT Partner Australian Shares Growth 1 6
BT Partner Australian Shares Value 1 6
BT Partner International Shares Growth 1 6
BT Partner International Shares Value 1 6
BT Multi-manager High Growth 6
BT Partner Australian Shares Core 1 NEF 6
BT Partner Australian Shares Growth 1 NEF 7
BT Partner Australian Shares Value 1 NEF 6
BT Partner Intl Shares Growth 1 NEF 6
BT Partner Intl Shares Value 1 NEF 6
BT Multi-manager High Growth NEF 6
BT Future Goals NEF 6
BT Conservative Outlook NEF 3
BT Balanced Returns NEF 5
BT Global Bond NEF 3
BT Australasian Bond NEF 3
BT International Share NEF 6
BT Australian Share NEF 6
BT Property Securities NEF 7
BT Technology 6
BT Technology NEF 6
BT Cash NEF 2
BT Multi-manager Growth 6
BT Multi-manager Balanced 5
BT Multi-manager Conservative 3
BT Multi-manager Growth NEF 6
BT Multi-manager Balanced NEF 5
BT Multi-manager Conservative NEF 3
BT Cash 2
BT Conservative Outlook 3
BT Balanced Returns 5
BT Property Securities 7

BT Lifetime Super - Employer Plan

Investment Option Risk Band - Standard Risk Measure
Investors Mutual Australian Shares 6
Macquarie Conservative 2
OnePath Australian Shares 6
Macquarie Diversified Fixed Interest 3
APN Unlisted Property 5
BT Multi-manager International Share 6
BT Multi-manager Australian Share 6
BT Multi-manager Fixed Interest 3
AMP Capital Investors Listed Property 7
BlackRock Scientific Diversified Growth 6
Colonial First State Australian Shares 6
Aberdeen Actively Hedged International Equities 6
MLC Growth 6
Schroder Balanced 5
Aberdeen Australian Small Companies 7
Fidelity Australian Equities Fund 6
Vanguard Growth Index Fund 5
Platinum International Fund 6
Aberdeen Emerging Opportunities Fund 7
Colonial First State Wholesale Geared Share Fund 6
Colonial First State Wholesale Global Resources Fund 6
Vanguard International Shares Index Fund 6
Vanguard Australian Shares Index Fund 6
BT Australasian Bond 3
BT Australian Share 6
BT Global Bond 3
BT International Share 6
BT MySuper 1940s Lifestage 2
BT MySuper 1950s Lifestage 3
BT MySuper 1960s Lifestage 5
BT MySuper 1970s Lifestage 6
BT MySuper 1980s Lifestage 6
BT MySuper 1990s Lifestage 6
BT MySuper 2000s Lifestage 6
BT Property Securities 7
BT Future Goals 6
BT Partner International Shares Growth 1 6
BT Partner International Shares Value 1 6
BT Partner Australian Shares Core 1 6
BT Partner Australian Shares Growth 1 6
BT Partner Australian Shares Value 1 6
Westpac Balanced 5
BT Multi-manager High Growth 6
BT Multi-manager Balanced 5
BT Multi-manager Conservative 3
BT Multi-manager Growth 6
BT Ethical Share 6
BT Global Property 7
BT Partner International Shares Core 1 6
BT Multi-manager International Shares 6
BT Lifetime Super Employer Plan - BT Cash 2
BT Conservative Outlook 3
BT Balanced Returns 5

BT Personal Portfolio Service Pension

Investment Option Risk Band - Standard Risk Measure
Schroder Wholesale Australian Equity Fund 6
Schroder Hybrid Securities Fund Wholesale Class 5
BlackRock Scientific Diversified Growth Fund 6
BlackRock Scientific Diversified Stable Fund 3
BlackRock Scientific International Equity Fund 6
Colonial First State Wholesale Diversified Fund 5
Colonial First State Wholesale Imputation Fund 6
Macquarie Wholesale Property Securities Fund 7
MLC Wholesale Horizon 4 Balanced Portfolio 5
MLC Wholesale Global Share Fund 7
MLC Wholesale Horizon 5 Growth Portfolio 6
MLC Wholesale Property Securities Fund 7
BlackRock Wholesale Balanced Fund 5
BlackRock Wholesale Australian Share Fund 6
BlackRock Wholesale Managed Income Fund 3
MLC Wholesale Platinum Global Fund 7
BlackRock Scientific Australian Equity Fund 6
Aberdeen Select Investment Actively Hedged International Equities Fund 6
Aberdeen Australian Equities Fund 6
BT Wholesale Geared Imputation Fund 6
Platinum International Fund 6
BT Wholesale Partner Australian Share Value 1 6
BT Wholesale Partner Australian Share Growth 1 6
BT Wholesale Partner Australian Share Core 1 6
BT Wholesale Partner International Share Growth 1 6
BT Wholesale Core Hedged Global Share Fund 6
Cash and Short-Term Securities 2
Australian Fixed Interest 3
International Fixed Interest 3
Balanced Growth 5
Conservative Growth 2
Diversified Growth 5
Dynamic Growth 6
Moderate Growth 3
Property 7
Australian Shares 6
International Shares 6
BT Wholesale Asian Share Fund 6
BT Wholesale Balanced Returns Fund 5
BT Wholesale International Share Fund 6
BT Wholesale Core Australian Share Fund 6
BT Wholesale Active Balanced Fund 5
BT Sustainable Conservative Fund 3
BT Wholesale Smaller Companies Fund 7

BT Personal Portfolio Service Superannuation

Investment Option Risk Band - Standard Risk Measure
Schroder Wholesale Australian Equity Fund 6
Schroder Hybrid Securities Fund Wholesale Class 5
BlackRock Scientific Diversified Growth Fund 6
BlackRock Scientific Diversified Stable Fund 3
BlackRock Scientific International Equity Fund 6
Colonial First State Wholesale Diversified Fund 5
Colonial First State Wholesale Imputation Fund 6
MLC Wholesale Horizon 4 Balanced Portfolio 5
BlackRock Wholesale Balanced Fund 5
BlackRock Wholesale Australian Share Fund 6
MLC Wholesale Platinum Global Fund 7
BlackRock Scientific Australian Equity Fund 6
Aberdeen Select Investment Actively Hedged International Equities Fund 6
Aberdeen Australian Equities Fund 6
BT Wholesale Geared Imputation Fund 6
Platinum International Fund 6
BT Wholesale Partner International Share Value 1 6
Australian Fixed Interest 3
Australian Shares 6
Balanced Growth 5
Cash and Short-Term 2
Conservative Growth 2
Diversified Growth 5
Dynamic Growth 6
International Fixed Interest 3
International Shares 6
Moderate Growth 3
Property Fund 7
BT Wholesale Balanced Returns Fund 5
BT Wholesale International Share Fund 6
BT Wholesale Core Australian Share Fund 6
BT Wholesale Active Balanced Fund 5
BT Wholesale Smaller Companies Fund 7

BT Retirement Selection - Personal Super Plan

Investment Option Risk Band - Standard Risk Measure
BT Australasian Bond 3
BT Australian Share 6
BT Global Bond 3
BT International Share 6
BT Property Securities 7
BT Future Goals 6
BT Cash 2
BT Conservative Outlook 3
BT Balanced Returns 5

BT Superannuation Investment Fund

Investment Option Risk Band - Standard Risk Measure
BT Superannuation Investment Fund 5

BT Superannuation Savings Fund

Investment Option Risk Band - Standard Risk Measure
BT Superannuation Savings Fund 1

Westpac Flexible Income Plan

Investment Option Risk Band - Standard Risk Measure
Australian Property Securities 7
Australian Property Securities (NCF) 7
Australian Shares 6
Australian Shares (NCF) 6
Balanced Growth 5
Balanced Growth (NCF) 5
Conservative Growth 2
Conservative Growth (NCF) 2
Dynamic Growth 6
Dynamic Growth (NCF) 6
Guaranteed Money Market 2
Guaranteed Money Market (NCF) 2
International Shares 6
International Shares (NCF) 6
Moderate Growth 3
Moderate Growth (NCF) 3

Westpac Lifetime Super Service

Investment Option Risk Band - Standard Risk Measure
Australian Property Securities NEF 7
Australian Share (NEF) 6
Australian Share 6
Balanced Growth 5
Balanced Growth (NEF) 5
Conservative Growth 2
Conservative Growth (NEF) 2
Dynamic Growth (NEF) 6
Dynamic Growth Fund 6
International Share (NEF) 6
Moderate Growth 3
Moderate Growth (NEF) 3
Money Market 2
Money Market (NEF) 2
Property Securities Fund 7
Cash Plus 2
International Share Fund 6

Westpac Personal Super Investment Plan

Investment Option Risk Band - Standard Risk Measure
Cash Based 2
Managed Stable 2
Growth Plus 6
Managed Growth 5

Westpac Personal Superannuation Bond

Investment Option Risk Band - Standard Risk Measure
Cash Based 2
Capital Stable 2
Managed Growth 5
Growth Plus 6
Income Accumulation 2
Balanced Growth 5
Dynamic Growth 6
Perform Protected 2

Westpac Simple Super

Investment Option Risk Band - Standard Risk Measure
Bank Deposit 2
Managed Investment 5

BT Super for Life

Investment Option Risk Band - Standard Risk Measure
Conservative Fund - Retirement 3
Moderate Fund - Retirement 5
Growth Fund - Retirement 6
Super Cash - Retirement 1
1940s Lifestage Fund - Retirement 2
1950s Lifestage Fund - Retirement 4
MySuper 1940s Lifestage Fund - Savings 2
MySuper 1950s Lifestage Fund - Savings 3
MySuper 1960s Lifestage Fund - Savings 5
MySuper 1970s Lifestage Fund - Savings 6
MySuper 1980s Lifestage Fund - Savings 6
MySuper 1990s Lifestage Fund - Savings 6
MySuper 2000s Lifestage Fund - Savings 6
Conservative Fund - Savings 3
Moderate Fund - Savings 5
Growth Fund - Savings 6
Super Cash - Savings 1