# Industry super fund vs. SMSF for shares



## Ferret (8 March 2007)

I've got my super in an industry fund and for the last 6 months I've been using its 'ASX200' option to build up a share portfolio in super.  

The advantage of the industry fund is low cost, only $52/year to use this facility, regardless of the size of the portfolio etc.  I've heard it costs at least $1500/year to run a SMSF.

You also pay brokerage of course.  This is to Macquarie equities and rates arer higher than some.  Min brokerage $12.50, 0.3% up to $10,000, 0.2% for amounts greater than this.  I typically buy parcels around $15,000, so the brokerage is actually less than my NAB account which is min $29.95.

Shares are actually held by National Nominees, but I get all the benefits of dividends, franking credits etc.

Biggest disadvantage is the way you buy or sell.  You can only by or sell 'at market'.  You place an order by midnight on Sunday and then Macquarie Equities buys or sells for National Nominees on Monday.  Your price is the average price of all the shares bought or sold for National Nominees on the Monday.  So you can't take advantage of short lived opportunities.  I look at my shares in super as long term investments, so I can live with this.

I still don't know how it all works when your shares are subject to takeover, rights issues etc.

Anyone else doing this or any comment?

Ferret


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## Kieran (22 April 2007)

*Re: Industry super fund vs SMSF for shares*

So who actually owns the shares Ferret?

It sounds an interesting concept; AFAIK a normal super fund pools all the members contributions and invests them in bulk. Your fund allows you to buy/sell investments yourself, seperately from the other members? Sounds like a bloody fantastic idea without going to the effort and expense of a SMSF! What's the actual name of your super fund?


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## Judd (22 April 2007)

*Re: Industry super fund vs SMSF for shares*

The description appears to fit the Australian Retirement Fund which recently merged with Superannuation Trust of Australia to form AustralianSuper.

ARF (and now AustralianSuper) allowes members to invest in one or more ASX 200 stocks in the S&P/ASX 200, which incorporates the top 200 companies and trusts (by market capitalisation) listed for trading on the Australian Stock Exchange.

The restrictions are:

Must have a minimum account balance of $10,000
Can only invest up to 50% of your account balance in the Option, subject to no single stock representing more than 20% of the total account balance. (Future contributions cannot be invested in this Option)
Must invest the remainder of the account balance in one or a combination of the Fund’s other investment options.

Minimum purchase per stock is $1,500.


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## Ferret (23 April 2007)

*Re: Industry super fund vs SMSF for shares*

I'm with CareSuper.  I think a lot of the larger industry funds now have similar ASX200 schemes.  The conditions Judd describes for Australian Super are identical to those for CareSuper.

National Nominees are the owner of the shares on the company share register.  But they hold them on behalf of my super account.  I hold some Rinker in the account I don't receive any info about takeover and can't choose whether or not to accept.  I'll have to go with National Nominees' decision on that, although I can always sell them on market if I want.

Ferret


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## superiorgrowth (13 July 2007)

*Re: Industry super fund vs SMSF for shares*

You Shouldn't be too concerned about the price of running a SMSF as the returns could *far* outway the additional cost if you know what you are doing, which should be your sole objective when thinking Superannuation. 

Check out this page as to the returns you could've/would've received in stable international banking shares that are not able to be invested in the ASX200 - http://www.superiorgrowth.com.au/forum/topic.asp?TOPIC_ID=48

Don't think cost, think of the opportunities if your industry fund is returning less!!


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## Julia (13 July 2007)

*Re: Industry super fund vs SMSF for shares*

Hi Ferret

So presumably your return will more or less equate that of the ASX200?

Whether to continue with this or to have a SMSF depends somewhat on your personality.  Some people really like the hands on idea of the SMSF (I definitely do) where you can take advantage of opportunities as you see them arise, but others are much happier knowing someone else is taking care of all the paperwork and details of decision making.

I often think the suggested cost of running a SMSF is overstated.  In addition to the brokerage and tax as applicable, my tax return and the year's associated contact with my accountant was $1500.  This was calculated more or less on the number of transactions and unaffected by the balance.
This contrasts to the fees charged in the public super fund I was in prior to the SMSF where I paid a percentage of the balance, and thus is very much less.

Do you think you could increase your return by doing it yourself?


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## Ferret (14 July 2007)

*Re: Industry super fund vs SMSF for shares*

Hi Julia,

It's interesting to hear your experiences with a SMSF.  $1500 a year to run it is a lot less than I've seen quoted in newspaper articles etc.  $1500 is still a lot more than the $59 a year charged by the industry fund, but is a very reasonable percentage for a larger balance.  I can appreciate the extra flexibility a SMSF offers and that this could well be worth the extra running cost.

I, too, don't like to pay a management fee based on a percentage of the balance I have in, say, an 'Australian Shares' fund.  I probably can't match the outright returns of professional fund managers, but in the long term I think I might be in front by just holding quality shares and not paying a percentage management fee every year.

I hope that I can get a better return than the ASX200 by the selection of the shares I buy to hold in the industry fund.  I've done better than the ASX200 in this first year, but so have many.  I don't think it is wise to put too much significance on a good result achieved in a bull market.  When the market turns down, I could just as easily find I've underperformed the ASX200.

Still, if I managed to achieve the ASX200 return over the long term and while paying no management fees and minimal admin fees, I would not be unhappy.

One other thing I like about the industry fund is the discipline it forces on me.  If I had a SMSF, I would probably be 100% invested in australian shares because this is the market I know and like, and I don't have much knowledge about investing in bonds, offshore markets etc.  The industry fund forces me to limit my direct share holdings to no more than 50% of my fund balance, and this is a good thing for me.  Of course, I'm sure others could manage a properly balanced SMSF, but I don't think I could.

Ferret


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## CFD (15 July 2007)

*Re: Industry super fund vs SMSF for shares*

Would be interested to know if many are using this and what their experiences are.

http://www.esuperfund.com.au/index.aspx


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## auric (15 July 2007)

*Re: Industry super fund vs SMSF for shares*

no problems with Esuperfund  cfd only bit hard to get on the phone at times though
 i changed from
another administrator and have so far found esuperfund okay
only problem is having only two brokers to choose from commsec and etrade
would prefer IB brokers
and at $599 are so far the cheapest
the 15 transaction limit with $40 per transaction over.
is what swayed me to go to Esuper who do not charge a transaction fee just the flat $599

cheers


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## CFD (15 July 2007)

*Re: Industry super fund vs SMSF for shares*

Thanks Auric, I'm still trying to get my head around the idea they restrict who you trade with! I understand their price of $599- is dependent on you trading with the agreed brokers. However if you have your own SMSF surely you can trade through a broker of your choice. As an administrator they would then charge higher fees but I can not see what they are.


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## robe4 (1 October 2008)

*Re: Industry super fund vs SMSF for shares*

I am thinking about a SMSF as i just got my statment from my industry fund it was down $ 16.000 .00 . I have changed my investment from high groth to conservative to stop the bleeding . Im not very happy with my fund and wonder if this has happened to others


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