Adviser platform provider Hub24 is specifically targeting SMSFs for its international managed portfolio offering as a way to address the asset imbalance in their portfolios.
Hub24 managing director Andrew Alcock said the rise of managed portfolios, or separately managed accounts, was enabling direct investment in international assets for all investors, including SMSFs, combined with the added advantage of professional investment management.
According to ATO figures, SMSFs had less than 1 per cent direct exposure to international equities.
“When you think about the ageing population and the low interest rate environment, people need opportunities to find greater rates of return otherwise we’re just not going to make it in terms of being self-funded retirees and we’re not going to have the lifestyles we want,” Alcock said last week.
“In the Australian market, within the top 20 you get 50 per cent of the market, which is limiting in terms of exposure to real opportunities that are occurring around the world – such as in healthcare innovation and IT.
“International managed portfolios are empowering both advisers and their clients to access the diversification and growth benefits of international markets. This could result in a sizeable increase in SMSF allocations to overseas equities.”
Hub24 launched a series of international managed portfolios on its platform last year from leading investment managers, including Arnhem Investment Managers and Southeastern Asset Management.
AllianceBernstein Investment Management Australia is set to be the next of a number of international managed portfolios to be added to the platform.
Hub24’s analysis on the platform found about 25 per cent of its clients were SMSF trustees.
“Looking at these SMSFs with advisers, their allocation to international equities is 17 per cent to 20 per cent,” Alcock revealed.
“That’s a far way off from the 1 per cent to 5 per cent of those who are unadvised or the average person in the country, and it’s a bit under what the professional managers are doing.
“So we’re finding that the SMSF trustees who use a platform with an adviser, in our experience, have greater exposure and they are getting access to those global markets and investments.”
Managed portfolio benefits include direct asset ownership, access to dividends, administrative ease and, depending on the individual platform capability, tax minimisation via capital gains tax modelling and tax parcel optimisation.
Alcock said the group was undertaking research to determine what type of SMSF profile would be most attracted to using the Hub24 platform for direct international investments.
In addition, he told selfmanagedsuper the weighting of direct international equities he expected new SMSF clients to take up would be dependent on the advice provided by their adviser.
“We are talking with a couple of the research providers about that and there are other pieces of data that haven’t been made available, which will be very interesting to look at and understand it better because it is a fragmented market so they have many different needs and wants,” he said.
“We see managed portfolios on Hub24 as the marriage of good advice and good practice.
“International managed portfolios with their direct stock access, professional management and easier underlying administration clearly align to the demands of SMSFs.
“As such, we believe they will be instrumental to significantly increasing SMSF exposure to international equities in the coming years.”