Independent Review (p.9)- process in place to allow for the

comprehensive review of the appropriateness, effectiveness and adequacy of the investment governance framework at least every three years; and

- is conducted by an operationally independent, appropriately trained and competent person

Process (p.11)- is there a determined investment objective for

each investment option;- is there a specific and measurable target

investment return objective; and- do the investment options allow for adequate

diversification

Roles, Responsibilities and Reporting (p.10)

- investment strategy roles and decision making roles are operationally independent; and

- all roles have clear reporting structuresInvestment Risk Management (p.9)- investment risks are identified and

considered in the context of Prudential Standard SPS 220 Risk Management

Skills, Expertise and Resources (p.10)- appropriate skills, expertise and

resources available to make informed decisions in the best interest of beneficiaries

Investment Governance Framework

Developing an Investment Governance Framework

Asset Allocation (p.14)

- clearly defined and documented asset allocation targets and ranges;

- the basis on which these would be changed;- an investment horizon and investment

objective for investment option(s); and- any investment restrictions including

counterparty exposure limits and use of derivatives

Risk Budgeting (p.15)

- is there a process in place to regularly review the impact of risk movements on its risk allocation; and

- the subsequent implications for the rest of the asset allocation of an investment option

Strategic Asset Allocation (SAA) (p.15)

- asset allocation ranges set at levels which allow for movements in the actual asset allocation;

- ranges are not too wide or too narrow to render the strategy unconstrained or ineffective; and

- asset allocation rebalancing strategy

Dynamic Asset Allocation (DAA) and/or

Tactical Asset Allocation (TAA) (p.15)

- formal policy document that governs the DAA/TAA process; and

- the specific market factors and/or conditions that would trigger a change

Investment Portfolio

Construction

Investment Portfolio Construction

Review Process (p.11)- Board formally reviews the investment strategy

annually at a minimum; - establish triggers that may lead to interim reviews of

the investment strategy; and- results from each review to be reported to the Board

Investment Strategy (p.10)- investment strategy for each investment option

and for the whole RSE; and- considers the benefit structure, the membership

profile, the size, stability and growth rate in terms of assets under management, the tax position of the RSE and the broader financial marketsMySuper Product Option (p.13)

- diversified over multiple sources of risk factors and sources of return;

- compliance with s.29VN(d)(i) and s.29VN(d)(ii) of the SIS Act is documented;

- compliant with the rules for the relevant permissible fees; and

- explicitly considers the diversification and liquidity needs of its membership profile

Investment and Return Objectives (p.11)- set investment objectives to achieve the desired

investment outcome for each investment option; and- set specific and measurable target investment return

and risk objective aligned to the size, business mix and complexity of the RSE

Diversification (p.12)- investment strategy has an appropriate composition of investments;- is exposed to multiple sources of risk taking into account other factors

such as liquidity, credit or macro risks (to achieve a desired risk exposure) and return; and

- impact on overall diversification in different market conditions

Risk Objectives (p.12)- investment risk objective is clearly articulated and

measurable;- risk objective includes reference to the potential

variability of returns; and- loss appetite is considered in addition to the standard risk measure (SRM)

Investment Strategy and Investment Objectives

Investment Strategy and Investment Objectives

Monitoring, Reviewing and Reporting (p.21)- annual reporting to the Board at a minimum;- triggers for an interim review of the investment

strategy; - operationally independent persons assess the

performance of each investment; and- have in place systems, structures and processes to

measure and report the performance of each investment within the portfolio

Development and Construction (p.17)- formal process and criteria for selecting each

investment;- undertaken prior to selecting the

investment/manager; - sufficient understanding of each investment and

how it is expected to perform; and - the investment is appropriate for the investment

option

Derivatives and Currency Exposure (p.20)- sufficient mechanisms to capture, monitor and manage; - potential risks associated with the use of derivatives such as liquidity risk, counterparty risk etc.; and- potential risks arising from foreign currency exposures are addressed

Due Diligence/External Providers (p.17)- appropriate analysis to support the due diligence

process; - most suitable approach adopted relative to in-house

capabilities and external expertise available; and- considered in the context of Prudential Standard

SPS 231 Outsourcing

Conflicts of Interest (p.17)- all actual and potential conflicts of interest are

appropriately documented; and- considered in the context of Prudential Practice Guide SPG 521 Conflicts of Interest

Implementing and

Maintaining an Investment

Strategy

Implementing and Maintaining an Investment Strategy

Asset Allocation Rebalancing (p.16)- documented policy for each investment strategy;- monitor and maintain the asset allocation within the

determined ranges and within a reasonable timeframe; and

- the basis for any change, triggers and method of rebalancing, permitted use of derivatives and reporting arrangements

Liquidity Management Plan (LMP) (p.31)

- a LMP that covers each investment option;- outlines the procedures for measuring and

managing liquidity risk and the liquidity risk tolerances;

- outlines the circumstances considered to be a significantly adverse liquidity event that requires action; and

- documents the process for reporting various liquidity issues

Investment Risk Reporting (p.25)- market and economic developments that may result in

altered risk exposures; - investment manager risk indicators (key staff

changes); and- investment option risk profiles measured by tracking

error and standard deviation

Stress Testing Reporting and Review (p.28)

- results and reporting provided at least annually to senior management and the Board; and

- periodic review of stress test results by senior management are documented in the investment governance framework

Stress Testing Program (p.26)- the stress testing methodology and process for the review of

the methodology;- procedures for reviewing and analysing the results of stress

testing outcomes; - the frequency of stress testing; and- triggers for the escalation of stress testing outcomes

Review of Investment Risk Management Arrangements (p.25)

- appropriate segregation of duties between those making investment decisions and those making investment risk management arrangements

Investment Risk Management, Stress Testing and Liquidity Management

Investment Risk Management, Stress Testing and Liquidity Management