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Trustees must avoid rash moves after US poll

SMSF trustees needed to guard against a knee-jerk reaction to any market volatility caused by the United States election and instead ensure they followed their long-term investment strategy, according to the SMSF Association.

“In the short term, the US election result, particularly if the Republican candidate, Donald Trump, is elected, is likely to increase market uncertainty and that may have a negative impact on the value of trustees’ SMSF portfolios,” SMSF Association chief executive Andrea Slattery said today.

“But over the longer term it will be much more difficult to predict how either a Trump or Hillary Clinton presidency will affect economies and shape financial markets around the globe, which is why it is critical trustees adhere to their long-term investment strategies and don’t have a knee-jerk reaction to the election.”

SMSFs were legally required to have an investment strategy, and times of extreme market volatility underpinned why the legislative framework made that mandatory, Slattery said.

“Your investment strategy is your best friend to guide your fund through uncertain times – such as the ones we could face post the US election,” she noted, adding a key aspect to consider was the diversification of an SMSF’s assets.

“Diversification of your retirement savings across different assets and regions is key in protecting your fund from volatile financial markets over the long term.

“Although it is important to keep track of events that affect financial markets and your retirement savings, it is important to remember that superannuation is for the long term and that sometimes short-term decisions can do more harm than good.

“A good investment strategy that keeps trustees disciplined and focused on the long term is essential.”

She said a strong example of that was the market volatility post-Brexit, with the decision by United Kingdom voters to leave the European Union (EU) in June having an immediate and momentous impact on financial markets across the globe.

“The UK leaving the EU was rightly portrayed as being one of the most significant political events in recent years, having implications for the UK and European economies, as well as the broader global economy,” she noted.

“But post-Brexit, the markets have settled down. Indeed, some economists and market commentators are seeing some positives in the UK’s decision to leave the EU.

“In the same vein, SMSF trustees should not have any hasty decisions post the US election.

“However, trustees should take the opportunity afforded by any market volatility in the wake of the US election to discuss their investment strategy with an independently accredited SMSF professional to ensure it meets their long-term retirement savings goals.”

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