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Diversification possible for small SMSFs

Developments in technology have allowed for new investment opportunities at a lower cost, giving SMSFs with smaller balances the ability to be more cost-effective and well-diversified than ever before.

“It’s a poor generalisation to suggest that sub-$200,000 DIY super funds – SMSFs – struggle to get scale and proper investment diversification, and thus are likely to produce suboptimal investment returns,” Six Park chief executive Pat Garrett said.

“Setting aside fixed costs, which have come down significantly for SMSFs in recent years, and whether an SMSF is suitable for you, size doesn’t matter when it comes to constructing a well-diversified investment portfolio.”

Garrett said with the dawn of exchange-traded funds (ETF) and highly accessible, low-cost investment management offerings, it was easier than ever for small-balance SMSFs to create globally diversified portfolios of Australian Securities Exchange-listed investments that provide asset class exposure to domestic and international shares, bonds, domestic and international listed property, infrastructure and cash yield assets.

“So yes, through low-value accounts you can get investment scale and a properly diversified portfolio quite simply,” he said.

“And there is no shortage of data to show that focusing on asset allocation and keeping costs low with ETFs and automated investment management services can produce superior investment returns versus high-priced, active stock pickers, most of whom fail to outperform their benchmark indices after fees.

“Technology has helped open a new world of affordable investment management options; the large players just don’t want you to know about them given the handsome fees they earn.

“[We help] clients of all sizes construct and manage investments following these proven investment principles.”

Six Park is an automated advice firm that offers a robo-advice solution combined with SMSF administration.

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