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SMSF global asset exposure
There is a marketing ploy used by a few global equity managers which always makes me question the quality of their research. I saw it again last week. A high profile manager presenting to over a hundred retail investors quoted the ATO data on SMSF investments in global equities as 1.3%. Even the ATO says it's incorrect. The presentation material said, "Concentration risk is possibly the biggest risk in a typical SMSF portfolio." Their chart is reproduced below.
The chart on the right hand side is more accurate. Hasan Tevfik of MST Marquee is a long-time SMSF watcher, and his estimate gives an allocation to global equities of about 12%. In addition, the Productivity Commission reports a global bond allocation by SMSFs of about 3%, and there would be more in asset classes such as infrastructure. The 'global assets' number is more likely about 15% and nowhere near 1.3%.
The fund manager should do better. Not only does it question the quality of the research, it shows a lack of understanding of their client base and perhaps dubious transparency.
Labor welcome to submit an article
No other topic has generated as many comments in Cuffelinks as the Labor proposal on franking credits. Clearly, due to our type of audience, most comments are critical, but many support Labor. After we posted the request from Tim Wilson MP last week, a reader wrote: "The Wilson-led enquiry is no doubt a smoke screen for a forthcoming Liberal 'pensioner scare campaign'."
We will publish a Labor response if they write it for us, and an invitation has been extended. Both sides of politics are guilty of misrepresenting the retrospective nature of policy changes. We argued Scott Morrison did this with the superannuation changes when he was Treasurer, despite his assurance:
"That is why I fear that the approach of taxing in that retirement phase penalises Australians who have put money into superannuation under the current rules – under the deal that they thought was there. It may not be technical retrospectivity but it certainly feels that way. It is effective retrospectivity, the tax technicians and superannuation tax technicians may say differently."
But Labor is equally guilty claiming policy changes have no retrospective element, such as:
"While making change to the tax system to improve fairness is a policy objective of Labor, it must be done without negative retrospective impacts on existing investments. This same approach was taken by Labor (in) the announcement policy to curb generous and excessive tax concessions for high income superannuation accounts."
Let's call it one-all for political-speak on financial policy changes.
At the risk of presenting one side of the argument again, Jon Kalkman argues Labor's proposal has the greatest impact on low income earners due to the 30% company tax rate. Peter Burgessbacks up his view in an attached paper.
More on investing and strategy ...
Sam Wylie delves into the three big fees you should check in your investment portfolio, and Noel Whittaker shows in certain circumstances, the $1.6 million cap no longer needs monitoring.
Rachel Lane challenges the other Royal Commission, the one on aged care, to remove the complexities and anomalies, while Recep Peker reports new research on how investors are suddenly pessimistic on share market returns. Prescient given recent falls?
In a reply to my 4Ps of roboadvice article last week, Harry Chemay has provided a comprehensive response.
The new CEO of the Australian Financial Complaints Authority (AFCA), David Locke, writes exclusively for Cuffelinks on how it will operate.
This week's White Paper from BetaShares is their latest update on the ETF market. Showing more institutions are using the market, ETFs had their highest turnover for a month at $3.9 billion.
For the first time, the Financial Services Royal Commission comes to Sydney next week. The best free show in town starring the bank CEOs starts at 10am Monday at 97-99 Goulburn Street.
Graham Hand, Managing Editor
For a PDF version of this week’s newsletter articles, click here.