Hostplus Indexed Balanced: Low-Cost Market Tracking
•
Introduction
Hostplus Indexed Balanced is a passive investment option that tracks a mix of market indices, allocating approximately 75% to growth assets and 25% to defensive assets. Designed for cost-conscious investors seeking broad market exposure without active management, this fund delivers transparent performance at a significantly reduced fee. In this article, we’ll outline its structure, performance history, cost benefits, risk profile, and suitability.
Asset Allocation
The Indexed Balanced option holds 75% growth assets—predominantly Australian and international equities via index funds—and 25% defensive assets, which include government and corporate bond indices as well as cash. By mirroring established benchmarks rather than picking individual securities, the fund captures market returns in line with the underlying index performance, ensuring predictable exposure without manager-driven deviations.
Historical Performance
Over the last decade, Indexed Balanced has delivered an average annual return of around 7.1%, closely tracking the performance of comparable blended benchmarks. During bullish periods, returns closely matched active balanced funds, while in downturns, the fund’s drawdowns mirrored index-based market movements. While it won’t outperform the market, it also avoids the risk of underperformance often associated with active managers. Investors should evaluate returns net of fees across various timeframes to confirm consistency.
Fees and Costs
One of the standout features of the Indexed Balanced option is its low-cost structure, with a net investment fee of approximately 0.36% p.a. This fee is significantly lower than actively managed balanced options, enabling investors to retain more of their returns. There are no hidden transaction or performance fees. Over long investment horizons, these savings can compound substantially, supporting higher net returns compared to higher-fee alternatives.
Risk Profile
With a higher growth allocation, the fund exhibits volatility of about 10–12% per annum, with a negative-year probability near 40%. As a passive product, it lacks tactical risk controls present in active funds, meaning it moves in lockstep with market swings. Investors should be prepared for full-market drawdowns, using diversification and long-term perspective to ride out volatility.
Investor Suitability
Hostplus Indexed Balanced is ideal for cost-sensitive investors who believe in efficient markets and prefer market returns over attempting to beat benchmarks. It suits long-term investors comfortable with market risk and seeking a ‘buy-and-hold’ approach. Younger super members, as well as those focused on fee minimization, will find this option particularly attractive.
How to Invest
Hostplus members can select Indexed Balanced within their portal under ‘Investment options’. Simply choose ‘Indexed Balanced’ to reallocate existing balances or direct future contributions to this passive strategy. For SMSF participants, replicating this allocation is straightforward using index ETFs such as Vanguard’s market-tracking funds for equities and bond ETFs for the defensive sleeve.
Conclusion
Hostplus Indexed Balanced offers transparent, low-cost market exposure through a diversified, passive approach. By eliminating active management fees, it maximizes net returns in alignment with benchmark performance. This option is well-suited to investors confident in market efficiency, seeking simplicity and cost savings in their super journey. Always ensure your investment choice aligns with your risk tolerance and retirement timeline.