FROM THE CHIEF EXECUTIVE

Westscheme's Investment Strategy July 2008

More than 93% of the money entrusted to Westscheme by its members is managed in the Westscheme Trustee's Selection.  This is Westscheme's principal/default investment option in which members' superannuation is managed unless they choose another investment option or combination of investment options.

The investment strategy for the Westscheme Trustee's Selection is set at least once every three years following a comprehensive review of all relevant factors.  The last time this was done was in March 2006.  The Trustee continuously monitors the effectiveness of the strategy against what is actually happening and looks likely to happen.  Part of this monitoring is an annual review of the strategy.

The annual strategy review is an assessment of issues such as changes in the asset allocations of comparable funds, changes in the risk and return outlook for asset classes and the potential inclusion of new asset classes.

On 11 June 2008,  the Westscheme Trustee Board conducted the 2008 Investment Strategy Review and decided to slightly vary the strategic asset allocation for the Westscheme Trustee's Selection and the Westscheme "Screened Investment" option.  These variations to the strategic asset allocation that will be implemented progressively from 1 July 2008 are outlined in the table below:


MARKET PORTFOLIO Now Before Change
Cash  1.0%  3.0%  (2.0%)
Cash equitised with listed Australian shares derivatives  1.0%  -  1.0%
Cash equitised with listed overseas (developed markets) shares derivatives  1.0%  -  1.0%
Listed Australian shares  29.5%  27.5%  2.0%
Listed overseas (developed markets) shares  19.5%  24.0%  (4.5%)
Listed global small companies shares  -  1.5%  (1.5%)
Listed emerging markets shares  3.0%  1.5%  1.5%
MARKET PORTFOLIO  55.0%  57.5%  (2.5%)
TARGET RETURN PORTFOLIO  45.0%  42.5%  2.5%
TOTAL PORTFOLIO  100.0%  100.0%  -

Equitised cash is a highly liquid combination of equity (shares) futures, currency forwards and cash that is expected to provide returns broadly in line with that of the relevant shares benchmark.  Over the long term, shares usually produce higher returns than cash.

Allocations to the Target Return Portfolio (TRP) are funded from the Market Portfolio.  In order to provide a more even funding of the TRP from the listed equity component of the Market Portfolio, the strategic allocation to listed Australian shares has been increased and the strategic allocation to listed overseas (developed market) shares has been reduced.

The increased allocation to listed emerging markets shares at the expense of listed global small companies shares mainly reflects the favourable medium-term outlook for this asset class.

The increase in allocation to the TRP is because Westscheme believes that this sector offers the most favourable risk/return trade-off.

Parallel changes will also be made to the Westscheme "Screened Investment" option.

"Westscheme's Investment Strategy - July 2008" published on the Westscheme website explains Westscheme's investment approach in the light of the strategic asset allocation changes made by the Trustee Board on 11 June 2008.


Howard Rosario
Chief Executive

4 July 2008

Previous articles from the Chief Executive are available via the links below: