Find information about TWUSUPER’s investment costs and related fees, reserves and unit pricing.
Investment costs and related fees
The fees described below are correct as at 1 July 2018 and may be revised or adjusted by the Trustee from time to time. We'll give you at least 30 days' notice of any material increase in fees, unless the increase arises only from an increase in costs.
Estimated investment costs vary for each investment option and may change throughout the year due to timing, cash flow, changes to investment managers, changes in asset allocation and other factors. Investment related expenses (such as investment manager fees and transaction costs) at Fund level are included as investment fees. Investment related expenses incurred in making investments through underlying vehicles (such as trusts) are included in the indirect cost ratio. Investment fees and indirect costs are deducted from Fund assets before the unit prices of our investment options are determined - they are not deducted from your account. These costs are estimated and based on information for the financial year ended 30 June 2018 and the Fund's strategic asset allocation as at 30 June 2018. If it becomes apparent that actual costs will vary in a way that is materially adverse, the estimated costs will be updated.
Performance related fee
In some cases investment managers are paid a performance related fee if they exceed agreed performance targets. The estimated investment fee and indirect cost ratio for the Balanced (MySuper)/Balanced and Equity Plus investment options include a performance related fee, payable if investment managers exceed agreed performance targets.
If an investment manager earns a performance related fee, it is passed onto members as an adjustment to the investment performance of the relevant investment option. A performance related fee will not always be payable. Because performance targets vary between investment managers, it is not possible to provide an accurate figure for the performance related fees. The performance related fees are therefore estimates based on:
- the strategic asset allocation of the relevant investment option as at 30 June 2018, and
- outperformance by the investment managers, based on indicative annualised calculations using fee information provided by investment managers (including underlying investment managers) for periods up to approximately 30 June 2018.
The actual performance related fee will vary depending on the actual return and agreements in place with relevant investment managers. The use of estimates is not an indication or guarantee of future performance.
Expense recovery fee
The administration fee includes an expense recovery fee that comprises estimated operational costs such as administration charges, legal fees, office and communication expenses and other miscellaneous expenses incurred by the Trustee in the Fund’s day-to-day operations.
The calculation of this fee is based on the estimated costs incurred for the financial year ended 30 June 2019. If it becomes apparent that actual costs will vary in a way that is materially adverse, the estimated costs will be updated.
Transactional and operational costs
Transactional and operational costs (T&O Costs) include costs such as brokerage, clearing costs and stamp duty associated with trading to implement the relevant investment option strategies. Some of these costs are additional costs to the investor, as shown in the table below, but most of them have already been included in either the investment fee or indirect cost ratio for the option. T&O Costs are paid out of the assets of the Fund or deducted from the underlying vehicles before the unit prices of our investment options are determined.
T&O Costs for the financial year to 30 June 2018 are estimated as follows:
Total T&O costs
T&O costs already included in other fees and costs
Additional cost to you
The costs for the current period may vary from these amounts and may be greater (or lower) than past experience.
Borrowing costs refers to costs relating to any credit facility used within an underlying vehicle as part of implementing the investment strategy of each option. The estimated borrowing costs (if any) for each of the investment options for the year ending 30 June 2018 are set out in the table below:
Net borrowing cost (estimated for year to 30 June 2018)
The costs for the current period may vary from these amounts and may be greater (or lower) than past experience. Borrowing costs are an additional cost to members. They are not included in costs disclosed in the investment fees or indirect cost ratios shown for each investment option.
Property operational costs
Property operational costs are transactional and operational costs that relate to the management of real property held within an investment option. The estimated property operational costs (if any) for each of the investment options for the year ending 30 June 2018 are set out in the table below:
Property operational cost (estimated for year to 30 June 2018)
The costs for the current period may vary from these amounts and may be greater (or lower) than past experience. Property operational costs are an additional cost to members and have not been included in costs disclosed in the investment fees or indirect cost ratios shown for each investment option.
The Fund maintains two reserves which protect against operational and strategic risks to the Fund.
The Operational Risk Reserve (ORR) is designed to protect members' investments against adverse events resulting from failed processes or systems and external events such as fraud. The Strategic Risk Reserve (SRR) is designed to protect members' investments against losses resulting from strategic and reputational risk events.
The ORR's target level is 0.275% of net Fund assets, and the SRR's target level is 0.10% of net Fund assets. As at 30 June 2018 both reserves were funded to their target levels and had no impact on the calculation of the indirect cost ratio.
Unit pricing explained
The Fund uses unit prices to calculate and allocate investment earnings to your account.
Your account balance is based on the number of units you hold and the prevailing unit price.
When you invest in one of the Fund’s investment options, your money is invested in an underlying pool of assets, along with money from other members who have chosen that investment option.
The underlying assets of each of the Fund’s investment options are divided into units. You are allocated a number of units that reflect your share in the total investment pool in your chosen investment option(s).
Each investment option has a corresponding unit price. Unit prices are calculated weekly and tend to move up or down based on the changing valuation of each investment option’s underlying pool of assets (taking into account estimates for investment taxes and other liabilities).
With unit prices:
- Money going into your account (for contributions or rollovers in) buys a number of units in your chosen investment option(s), based on the prevailing unit price.
- Money coming out of your account (for withdrawals, taxes, and other fees and costs) involves the sale of units from your chosen investment option(s), based on the prevailing unit price.
- Investment earnings are reflected in the weekly unit price for each investment option.
We generally publish unit prices each Wednesday.
Your account balance will reflect the prevailing unit price. This allows you to see the change in your account balance from week to week.
If a unit price cannot be determined due to unforeseeable circumstances (eg. trading suspensions in relevant markets or unusual market volatility), the Fund may temporarily suspend some transactions.
The Fund has developed controls to minimise the chance of unit pricing errors – however, errors may still occur. Should an issue be identified that may affect members, we will promptly investigate the issue and advise any affected members.