How are Zuper's investment portfolios built?

A lot of people ask me - how are you going to get people interested in super? The thing is, super is money, and money is pretty darn interesting. Especially when you think about what you can do with it.

I wrote this post to share with you how we built our investment portfolios at Zuper. They may not be donuts, but they definitely have some pretty tasty sprinkles in them, in the form of BlackRock’s MegaTrend products.

If you have never thought about the power of your super, I challenge you to read this article. I challenge you to have a really deep think about how a simple change in where you direct your money could shift the world forward. In the direction you want it to go.

First we asked

We started off by asking people what they wanted. Why? Because we believe Zuper should be a platform that lets people like you express your vision of the world through your money.

Then we validated

Once we had collated your votes, we went and did some serious research on the trends that were the most popular amongst our audience.

As it turns out, our audience were bang on the biggest trends the smartest minds are also thinking about. Tech, health and renewables fall into an area the world’s largest money manager BlackRock, call Megatrends. BlackRock look after roughly $6 Trillion globally, most of which is in low cost and easy to trade investment products called Exchange Traded Funds, or ETFs for short.

We soon found out the global BlackRock team had spent thousands of people-hours researching these big global trends - trends that will shape the next fifty years - and then turned this research into actual ETF products you can put your money in! These products are called MegaTrend ETFs, and after careful consideration, and lots of chats with the BlackRock team, we decided they should be the building blocks of our investment options in health, tech and green.

Then we built

We believe we are the first super fund in Australia to use all five of BlackRock’s MegaTrend ETFs.

ETFs have rewritten the rules of the investment market over the past 20 years. They make it easy for everyday investors to get a slice of the biggest companies in the world, at a reasonable price.

In one trade you can buy dozens, sometimes hundreds of companies, direct from an exchange. It’s like shopping in a department store for all your favourite brands, but only having to pay at the one counter for everything. And even better, ETFs are basically like personal shoppers, because they’ve already prepared selections of stocks for you.

Today you can put 20% of your money into one or a combination of our tech, health and green options. The other 80% goes into one of our bases (more on those later).

Lots of people ask us “why 20%?” We arrived at this number in consultation with our Asset Consultant and investment experts, as a good risk balance for our members. We may change this in the future, but we’ll always be guided by what delivers the best risk versus reward ratio.

So here’s what’s in each option:

Future Tech

Software is eating the world, and considering most of us our glued to our phones, it’s not hard to see tech getting even more ingrained in our lives in the coming years. Here are the ETFs you’re invested in, if you choose Tech.

iShares Exponential Technologies ETF - It’s great to be invested in Blue Chip tech, like Apple, Amazon, Netflix and Tesla - and you are in Zuper funds. But what’s possibly more exciting is to be invested in what’s coming next. That’s what this ETF is about.

iShares Digitalisation UCITS ETF - Digital companies are transforming every human experience - from social media, to ecommerce, to fintech and cybersecurity. You’re in BlackRock’s pick of the best with this ETF.

iShares Automation & Robotics UCITS ETF - Look, you may as well invest in the robots before they take your job. This ETF is all about the bots. Zena’s favourite, of course.

iShares Nasdaq Biotechnology ETF - Personalised medicine, advances in genetic sequencing and new drug development aided by technology is making leaps and bounds. Just call this investment preventative ‘tech enabled’ medicine!

Future Green

Data from NASA shows that global warming is currently outpacing efforts to curb it. We can get depressed, or we can invest in the future. This is the fund for backing renewables and also water.

iShares Global Clean Energy ETF - Solar, wind, and other renewable sources are rapidly displacing fossil fuels. Get behind them with our Green option

iShares Global Water UCITS ETF - Water is a scarce resource, and it’s only becoming scarcer. This ETF give you exposure to 50 global companies involved in the water business.

Future Health

Want blue chip health companies like Johnson & Johnson? Check. Want emerging healthcare companies like Illumina? Check. Want exposure to companies set to benefit from the ageing population? Check. This health fund looks beyond the obvious, to capture the big demographic shifts, as well as the exciting new innovations coming out of the health sector.

iShares Global Healthcare ETF - Exposure to pharmaceutical, biotechnology, and medical device companies from around the world

iShares Healthcare Innovation UCITS ETF - Access to companies in developed and emerging markets that are generating revenues from specific sectors focused on pushing the boundaries in medical treatment and technology

iShares Ageing Population UCITS ETF - Includes developed and emerging market companies which are generating significant revenues from the growing needs of the world’s ageing population (defined as people aged 60 years and above).

What’s in the rest of a Zuper member’s portfolio? (Zuper Impact and Impact+)?

The remaining 80 per cent of your money (or sometimes 100 per cent, if you don’t want to add a tech, health or green option) can go into either Impact or Impact+.

Zuper Impact

Australian shares

  • BlackRock’s iShares Core S&P/ASX 200 ETF

Australian bonds

  • Macquarie’s True Index Australian Fixed Interest Fund

International shares (ex-tobacco ex-controversial Weapons ex-nuclear Weapons)

  • BlackRock’s iShares Screened Wholesale Indexed Int Equity Fund

Investment grade corporate bonds (ex-civilian firearms, ex-controversial weapons and ex-tobacco)

  • BlackRock’s iShares ESG USD Corporate Bond ETF

Cash

  • BlackRock’s iShares Core Cash ETF

Property

  • Macquarie’s True Index Listed Property Fund

Infrastructure

  • Macquarie’s True Index Listed Property Fund

Zuper Impact+

Impact+ has everything from above, except

We remove: BlackRock’s iShares Core S&P/ASX 200 ETF And we add: Russell Investments Australian Responsible Investment ETF

We do this because it removes coal companies, to give that extra impact oomph for people that care about this (+, get it?).

There’s an ETF for that

As we look into the future, and the possibility of adding more options, there is no doubt ETFs make investing a lot more fun.

If you are interested in something, you can usually find an ETF for it. For example, you can invest in marijuana ETFs, music streaming ETFs, Organic ETFs…you can even invest in a basket of ‘sin stocks’, via a Vice ETF.

The point is, the choice is yours, and ideas and new investment strategies are what drive the creation of new ETFs - from novelty plays to serious, big picture, global trends. We’ll be adding more ‘flavours’ to our portfolios in the future, and we hope you’ll be on board to vote on which ones you want us to create!

This article is general in nature, and has been prepared without taking into account your objectives, financial situation or needs. You should consider if the information is appropriate and whether you need to speak to an accredited professional.

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Jess Ellerm

CEO and Co-Founder at Zuper Superannuation. Loves fintech, writing, pilates, Campari and soda's and, as of 2018, marathon running.

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