SMSFs must not forget about investments

Despite the noise across global economic markets, SMSFs should not forget to remain focused on their investments and investment strategies, particularly as the new superannuation changes have been receiving all the attention from advisers and trustees.

“Investment strategies are important because it gets trustees to think about what the investments of the SMSF should look like and also, not necessarily specific types of investments but in general, look at the risks associated with those investments,” SuperConcepts SMSF technical and private wealth executive manager Graeme Colley told a recent AMP Capital SMSF Insights Webinar, called “Investing for the future and preparing for the worst”.

“For example, if you go into bonds, is it a high-risk investment and is it going to be suitable for the type of super fund they’ve got, such as being in accumulation phase compared to when they move to pension phase?

“Another consideration is that certain economic conditions may change [asset class performance].”

A poll of webinar attendees found 80 per cent were likely to increase allocations to shares, infrastructure and commercial property in the next six months.

AMP Capital chief economist and head of investment strategy Shane Oliver said when it came to investing, one of the biggest challenges for trustees was filtering through a lot of noise.

“I think it’s really important to get that noise under control by focusing on the long-term strategy,” Oliver warned.

“There have been a lot of distractions over the last four years, starting back at mid-2013 with the Fed saying it would start to taper or reduce its quantitative easing, running through to elections across Europe recently, as well as North Korea.

“Despite all of that, if you look at the returns from a mix of assets over the last couple of years, in particular the last five years and the last financial year, major asset class returns have been pretty good unless you’ve had all your money in cash and term deposits, which in that case hasn’t been very good.”

He said a typical superannuation fund with a growth bias returned about 9.5 per cent over the past financial year and 10 per cent over the past five years.

“So again, despite all the noise, it hasn’t been too bad and just stressing that it is worthwhile turning down the noise and not getting distracted by those events,” he noted.

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