Investing, Reports, SMSF

How SMSFs can beat the best super funds in Australia

How to get better returns and spend less time – and money – managing your SMSF investment portfolio.

Are you one of the thousands of SMSFs that are unhappy with high fees and poor service from your adviser or accountant? 

Are you unhappy because some of the larger Industry super funds perform better than your current SMSF?

A common myth is that you can’t get better returns for the hassle – the time and cost – of running your SMSF.  In fact, the 2019 survey by Investment Trends showed that investment advice was the biggest unmet need of SMSFs with 315,000 citing they need more advice.

But before you consider closing or transferring your SMSF to an industry fund, find out how Stockspot can help you get better returns and spend less time managing your SMSF portfolio, while also keeping your costs low.

Save time – and money

Simply investing in a diversified portfolio of Exchange Traded Funds (ETFs) can take the pain out of managing your SMSF. A big benefit of ETFs is that they give you more reliable returns than picking shares, as well as help simplify your SMSF audit and tax.

Using an online investment advisor like Stockspot to select the right ETFs for your SMSF portfolio helps even more by automating a lot of tasks like rebalancing and revising your investment mix as your needs change and you near retirement. 

No more having to monitor the stock market or adjust your investment mix yourself. This not only helps you save precious time, it also helps you save money on things like brokerage fees and auditing at tax time.

The golden rule – low fees

Just as importantly, you want to keep the fees you pay for an advisor to manage your investment portfolio as low as possible. Stockspot’s Fat Cat Funds Report 2020 Report has once again found that fees make all the difference when it comes to your retirement savings.

If you are paying more than 1% per year in fees, you could be $200,000 worse off when you retire. So our number one golden rule is: less than 1% in fees.

That includes any advice fees, subscriptions and brokerage. Stockspot’s low monthly fee is all inclusive and we don’t charge brokerage when we buy, sell or rebalance your portfolio.

We also help you claim any franking credits owed to boost your total return.

ETFs: the secret weapon for SMSFs

Stockspot’s investment strategy of sticking to a mix of low-fee ETFs (think global and Aussie shares, bonds and gold) has delivered better returns than most industry and retail funds in Australia.

ETFs have also done much better than listed investment companies (LICS) and actively managed funds due to their lower cost, better tax efficiency, transparency and market tracking investment structure. 

Our Topaz (growth) portfolio did better than about 97% of growth and balanced super funds over the last 5 years, including the largest retail and industry funds in Australia.

And the more conservative Stockspot portfolios have done better than every moderate fund! Well diversified, low cost ETFs are the secret to better returns.

GrowthAverage super fund5.1%28.0%
Stockspot Topaz portfolio7.1%41.0%
BalancedAverage super fund4.1%22.0%
Stockspot Turquoise portfolio6.6%37.5%
ModerateAverage super fund3.5%18.9%
Stockspot Amethyst portfolio6.2%34.3%
Data as of 30 June 2020.

The key to diversification

Lack of diversification can expose SMSFs to unnecessary risk if a significant investment fails. With the ATO just announcing they are concerned that many SMSFs might not be diversified enough, now is the perfect time to review your investment mix.  

Global shares represent only 15% of many SMSF portfolios in Australia.  However, recent research^ shows a portfolio with a mix of 48% global shares and 52% Australian shares has given the best mix of risk and return over the last 20 years. At Stockspot, our portfolios are currently split between 30-48% in global shares and 52-70% Australian shares.

All Stockspot portfolios also include a mix of defensive assets such as bonds and gold. You may be familiar with bonds, but why gold you ask? The negative correlation between shares and bonds has weakened recently. This means that bonds may not provide as much of a cushion in a share market dip.  Think of gold as like your last line of defence if this happens.

What’s the right asset allocation?

Getting your SMSF asset allocation right will help your portfolio deliver more consistent performance whether share markets rise or fall.

Stockspot offers a free assessment and will suggest the right investment mix of low-cost ETFs for your SMSF. Find out more about different SMSF strategies for income and capital growth or protection.

Plus the strategies we recommend have experienced much lower volatility (risk) than only owning Australian shares and have had consistent returns over 1, 3 and 5 years, as you can see in the table above.

Our top tip: stay in control of your retirement fund

Before you think about closing or transferring your SMSF to an industry fund, it’s worth considering how Stockspot can help save you time and money.

Plus you can tailor your SMSF investment portfolio by adding extra assets, countries or market sectors to your portfolio with Stockspot Themes. You might want to choose areas of the market you want a greater focus on in your portfolio.

For example you might want additional exposure to certain geographic regions (such as China or the U.S.), asset classes (global property or bonds), or market factors (small companies, dividend shares or socially responsible shares).

And we ensure that your investment strategy stays balanced based on your goals and investment horizon.

^Vanguard: Approach to Constructing Australian Diversified Funds (2017)

  • Chris Brycki

    Founder and CEO

    Chris has been vocal in calling out the industry 'Fat Cats' and is known for telling it as it is. He was an inaugural member of two Advisory Committees for the industry regulator ASIC, and was previously a fund manager at UBS. He holds a Bachelor of Commerce (Co-op Scholarship) from UNSW.

Founder and CEO

Chris has been vocal in calling out the industry 'Fat Cats' and is known for telling it as it is. He was an inaugural member of two Advisory Committees for the industry regulator ASIC, and was previously a fund manager at UBS. He holds a Bachelor of Commerce (Co-op Scholarship) from UNSW.

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