“In the eyes of their critics it seems SMSF trustees can never get it right on the investment front,” said SPAA Director of Technical and Professional Standards, Graeme Colley.
Previously SMSFs have been criticised for holding too much cash, then property, and now for being “overweight in Australian equities, especially the fully franked blue chips such as the banks and Telstra.”
“Why can’t they ever make up their minds if there is a problem with SMSFs?”
“If SMSFs are criticised for being too exposed to market risk then, guess what, the APRA funds that are in the same boat will fall just as heavily and their members won’t even know what’s happened as they are not engaged, unlike the SMSFs where members have high levels of engagement,” said Mr Colley.
Mr Colley criticises APRA-regulated super funds which allow members to invest all their superannuation in a single asset class. “What’s worse, an APRA-based fund that lets you put all your money in one asset class or an SMSF that may be overweight in one asset class? I can’t speak for APRA-based funds, but in the case of SMSFs it might just be the case that an overweight allocation best suits the fund’s risk profile.”
SMSFs are criticised when investment allocations lag changes in market conditions, however these differences are “barely noticeable compared with what APRA funds allow their members to do without proper advice and assessment of risk profiles.”
APRA statistics “conclusively show” that on average SMSFs outperform APRA-regulated superannuation funds in bear markets and have equal returns in bull markets, according to Mr Colley.
“This is shown in the latest performance information comparing APRA and SMSF funds that show there is a lower level of risk with SMSFs.”
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