Lessons and musings from the SMSF Trustee Empowerment Day 2016

Lessons and musings from the SMSF Trustee Empowerment Day 2016


Recently the Self Managed Super Trustee News held SMSF Trustee Empowerment Days in Brisbane, Sydney and Melbourne.

The aim was to give SMSF trustees the opportunity to hear from eight speakers whose role was to impart knowledge and provide alternative sources of investments for superannuation.

In this time of low interest rates, volatile share markets and high prices is some areas of real estate, trustees may struggle to manage risk and returns to provide for future member benefits.

Darin Tyson-Chan, the editor of Self Managed Super Trustee News, is to be congratulated on putting together such a comprehensive agenda, and inviting some of Australia’s leading experts in superannuation and investment products. I urge to take the time to review his web site Self Managed Super Magazine. There is a wealth of information, including video interviews. In addition to providing regular news updates, you can subscribe to their monthly print edition magazine.

The morning started with Glenn Rushton of Rushton Financial Services. Glenn’s presentation was to address the economic headwinds and what it may mean for your superannuation investments. Using the S&P500 as an example, he was able to demonstrate that since 1929 there have been 25 Bear Markets.

A Bear Market is defined as a share market index falling 20% or more. Some Bear Markets are much more severe than others, with the average Bear Market being a 35% – 43% fall in share prices. Given the past performance, one could expect a Bear Market once in every 3.5 years. For most people, particularly those in the pension phase, preservation of capital must be paramount.

To overcome this volatility, Rushton Financial Services have developed a product they refer to as Global Neutral Fund. The aim is to select from the worldwide markets a group of the best performing shares, and against these shares they go ‘short’ on a group of shares where it’s anticipated that the prices will fall. Thus if the market performs well, the profits from the ‘long’ trade are expected to outperform the losses from the shares with the short trade.

When the market is in a downturn, profits will be made from the ‘short’ trades and it is anticipated that these profits will outperform the loss on the growth shares. The end result should be that regardless of whether the share market is rising or falling, the volatility of your fund is reduced and profits should continue in both rising and falling markets.

Philip Carden from Supervised Investments, demonstrated how returns on investments could be increased through their international bond funds.

David Bassanese, the chief economist from BetaShares undated the audience on the latest ETF market and how one can target specific types of ETF’s to diversify away from the returns of the ASX 200.

Dennis Egar, of Magellan Asset Management, put the case for investing in infrastructure equities as the qualities of infrastructure assets may be well matched with that of superannuation funds. Magellan are one of the most successful fund managers in Australia. Its latest fund, MICH (ASX) has recently been launched with the aim of providing a dedicated international infrastructure fund.

Julia Lee, the equities analyst from Bell Direct, gave a timely update on direct investing in shares. She highlighted a Stock Filter Tool which is provided free to Bell Direct clients. Check out their website and look at all the technical tools provided to help you trade like a professional.

Gary Connolly of Trilogy Funds, operates a boutique unlisted property and mortgage trusts. He services small property developments, particularly in the corridor between Brisbane and Ipswich. With monthly returns of around 8%, I thought both options were attractive. The property trusts usually last five to seven years, and the sale price will depend on the property market at the time.

While you may have the upside of a capital gain, with the property trust, there is always the worry of capital loss should there be a severe downturn in small commercial developments. With the mortgage trust you simply receive your monthly payment of around 8% and your funds can be withdrawn according to their rules. Gary said that in 10 years of operation, they had not lost money by borrowers defaulting on loans. I put this down to the strict guidelines he follows when approving loans, making sure there is an adequate LVR.

One of the most informative talks was from Tracey Besters, a master SMSF designer from SMSF Design. Tracey discussed the complex issue of making sure your SMSF are distributed to the correct people on your death. This area is very complex and one of those things people tend to ‘put off’. Her first piece of advice is to find your Trust Deed and read it carefully. If you don’t fully understand it or are concerned with some of the clauses, then you should seek professional help to make sure everything is in place. This is particularly important where you have blended families or divorced partners.

It’s hard to imagine that at the end of these seven talks, the trustees would line up with great enthusiasm for the final talk by Tim Miller, founder of Miller Super Solutions. Tim’s topic was the federal budget handed down in May. The problem is that the government has given an undertaking to amend some points to help get the legislation through parliament. Nevertheless his talk on possible outcomes was a great help. He did alert the group to a new education site he is developing at Intellum. You will find on his blog, an article on what the 2016 Budget changes mean for SMSF.

Knowledge is power and I urge all SMSF trustees to take the time to review the websites of any of these people who may be of interest to you. They were hand-picked by their peers, as experts in their field of knowledge. I believe you can have confidence in what they have to say.

Finally, do consider contributing to SMSF Magazine which will always provide you with the latest updates on superannuation fund rule changes together with a wealth of information to manage your fund.

Glenis Phillips, F Fin

Disclaimer: Financial Mappers does not have an Australian Financial Services License, does not offer financial planning advice and does not recommend financial products.

I am a founding board member of Plencore Wealth Ltd and Plencore Online Pty Ltd. I am the designer of the product Financial Mappers and Financial Mappers PRO, cloud based modelling software for Personal Finance. This software is sold on the web site www.financialmappers.com.au.I am an educator, investor and expert in both personal finance and mathematical modelling and the author of 'Map Your Finances'.I have both a Graduate Diploma in Applied Finance and Investments and a Diploma in Financial Advising from the Securities Institute of Australia. I also have a Financial Analysis Certificate, by Distance Learning from University of Technology, Sydney. I am a Senior Fellow and Senior Mentor of FINSIA.
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