My AustSuper ASX300 'low cost averaging' trading adventure

So_Cynical’s - AustSuper ASX300 ‘low cost averaging’ trading adventure.

I have recently opened an AustSuper account because i felt i didn't have enough money in super to justify opening a SMSF, even a cheapo DIY type SMSF provider like ESUPERFUND at $849 a year (with no insurance), was just to much to pay when i only have 51K in super...I felt that Aust Super with their ASX300 investment option was like having a half SMSF but with only about 30% of the DIY SMSF cost.

I'm very confident of my ability to ‘beat the market’ and the woeful returns achieved by the vast majority of investment managers working in the super industry as i have had some success following my low cost averaging strategy using my own money and simply plan to continue with that strategy inside my AustSuper account, the way AustSuper allows me to trade will mean i have a lower margin for error due to having to place orders for execution on a weekly basis and accept the average (Monday) price rather than my price.

The AustSuper site says “ Instructions to buy or sell stocks in the ASX 200 Shares option that are received by AustralianSuper by 1pm Friday, or by Sunday midnight if submitted via MemberOnline, will be implemented on the first trading day of the following week.” Hopefully what that means is that my order will get executed the next day, however AustSuper do seen to be a little slow when it comes to getting things done....time will tell.

http://www.australiansuper.com/inve...ents_how-to-invest-in-the-ASX-200-option.aspx

I plan to use this thread to document my progress and hopefully inspire others with low super balances to consider their options and take charge of their super rather than just accept the crappy choices on offer from the bulk of the super industry...at the moment only AustralianSuper, CareSuper and Legalsuper offer members the ability to pick their own stocks from the top 200 listed company's, with AustSuper expanding the option to the ASX300 later this year.

http://www.brisbanetimes.com.au/mon...rs-heats-up-20110419-1dlzr.html#ixzz1KPtlLFO0

I can invest up to 50% of my account balance in the AustSuper ASX 200/300 Australian Shares option, with funds to cover switches into the ASX 200 Shares option being debited from my account in accordance with the standard switching protocols, debited pro-rata across my investment choice allocation, also no single stock can make up more than 20% of my total account balance.

All the rules can be found in this link.

https://www.australiansuper.com/res...CE99EB4FAB52A367/MIC_Guide_Industry_Nov10.pdf

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Starting investment choice allocation (ASX300 investment option funds get drawn from here pro-rata)

• High Growth 12%
• Balanced 12%
• Conservative Balanced 10%
• Australian Shares 10%
• Property 20%
• Australian Fixed Interest 8%
• Diversified Fixed Interest 28%

With the $25500 available i plan to buy 3 stocks investing approximately $7333 in each, leaving $3500 of available funds to add to the recycled funds made available after the first profit take...for the next 12 to 24 months i would expect to maintain an entry size of about $7330 with plans to raise the average entry size to 8K when funds permit, growing over time to 9K and so on.

What i have to work with and the Plan - May 2011

• Total account balance $51000
• Total available for ASX300 share option $25500
• Position size per trade $7333
• Buy low sell higher
• Profit take target 9% +
• Trade exits will be partial with profits left in with an equal amount of capital + 20%
• Building a dividend/distribution stream via recycling capital

Stock selection will be based on fundamentals and my own twisted take on contrarian and value investing with a little chart action to make things interesting...my objective is firstly to beat the total return of the other half of my account, however i would only genuinely be happy if i was able to double it, over the moon if i was able to triple it, i expect to be somewhere in between happy and over the moon.

All trades with average price paid will be posted as soon as i have confirmation of the trade going thru which is about as live as AustSuper will allow....what i post in this thread will be real trades with real money, same as i have posted in the many stock threads i have contributed to except this time the dollar amounts will be public.

I expect employer, personal and any Govt co-contributions will total somewhere between 5 and 6K annually (currently considering a small salary sacrifice that would boost this by 2.5K annually) ~ fees and charges (less insurance) including those triggered by my activity in the ASX300 investment option should total around $250 to $330 per year...i plan on retiring in 7 to 10 years and will need this fund to be worth at-least 180K by then for my plans to come to fruition...minimum 13% PA growth needed to retire in 10 years.

I just joined consolidated my existing accounts into Aust Super. I understand that a brokerage commission is paid every time you buy/sell shares.

I'm not sure on when trades get executed, only that they need to be in before Sunday night sometime. I would assume this means they only adjust portfolio once per week on a Monday in which a lot can happen in the space of a week!

So_Cynical said:

Starting investment choice allocation (ASX300 investment option funds get drawn from here pro-rata)

• High Growth 12%
• Balanced 12%
• Conservative Balanced 10%
• Australian Shares 10%
• Property 20%
• Australian Fixed Interest 8%
• Diversified Fixed Interest 28%

Click to expand...

Hi So_Cynical, sounds like a great idea, I'll be following it with interest. I don't understand the above. With the 50% that you have to let them manage where will you invest it? Are you saying you will put it in each of the above percentage wise as you listed? If so why not just put the 50% in the balanced fund as they cover all the above. Can you clear that one up, I am a bit thick?:

Just to let you know, the balance online does not get updated or shown until 1-2 weeks later after you traded. Mostly after 2 weeks, they will send you a letter of confirmation dating back to the Monday you traded.

Neutral said:

I just joined consolidated my existing accounts into Aust Super. I understand that a brokerage commission is paid every time you buy/sell shares.

Click to expand...

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So_Cynical ] Starting investment choice allocation (ASX300 investment option funds get drawn from here pro-rata) [list] [*]High Growth 12% [*]Balanced 12% [*]Conservative Balanced 10% [*]Australian Shares 10% [*]Property 20% [*]Australian Fixed Interest 8% [*]Diversified Fixed Interest 28% [/list] [/QUOTE] [QUOTE=Bill M said:

I don't understand the above. With the 50% that you have to let them manage where will you invest it? Are you saying you will put it in each of the above percentage wise as you listed?

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Yes...all moneys coming into the account have to go 100% into the "other' investment options.

Bill M said:

If so why not just put the 50% in the balanced fund as they cover all the above. Can you clear that one up, I am a bit thick?:

Click to expand...

Good point Bill...i would reckon that the total return from the other half of my account may well end up very similar to the Balanced option however i wanted it slightly skewed to property and interest.

I suppose i could of gone

• Balanced 60%
• Property 20%
• Australian Fixed Interest 15%
• Diversified Fixed Interest 15%

and got a very similar result.

late_start said:

Just to let you know, the balance online does not get updated or shown until 1-2 weeks later after you traded. Mostly after 2 weeks, they will send you a letter of confirmation dating back to the Monday you traded.

Click to expand...

I'm starting to get the feeling that ill be a fair bit dealing with AustSuper my rollover from Colonial was executed by Colonial on the 14th of April and is yet to show up in my AustSuper account, and yet i paid $100 into my AustSuper account via Bpay online and it showed up 3 days later...go figure.

It sounds well worth trying, So Cynical. Do you pay brokerage on each trade, as well presumably as the annual management fees? If so, how much?
Good luck with it.

So_Cynical said:

Yes...all moneys coming into the account have to go 100% into the "other' investment options.

Click to expand...

OK so you have decided your managed investment options but if all new money coming in goes into it then it will be skewed in favour of the 50% managed option won't it? How will you know if you are beating the managed option or not? Example, 25k in managed options and 25k in So Cynicals picked shares, then you decide to BPay 5k into the fund will that be split as well or does the managed 50% get it?

I'm starting to get the feeling that ill be a fair bit dealing with AustSuper my rollover from Colonial was executed by Colonial on the 14th of April and is yet to show up in my AustSuper account, and yet i paid $100 into my AustSuper account via Bpay online and it showed up 3 days later...go figure.

Click to expand...

When I joined this fund they stuffed up my rollover. It took nearly a Month to come through and then I had to ring them to sort out a few things. If your rollover isn't in within the next 2 weeks I would call them. Generally I found Australian Super pretty good once all set up, no longer with them now for other reasons.

Bill M said:

OK so you have decided your managed investment options but if all new money coming in goes into it then it will be skewed in favour of the 50% managed option won't it? How will you know if you are beating the managed option or not? Example, 25k in managed options and 25k in So Cynicals picked shares, then you decide to BPay 5k into the fund will that be split as well or does the managed 50% get it?




When I joined this fund they stuffed up my rollover. It took nearly a Month to come through and then I had to ring them to sort out a few things. If your rollover isn't in within the next 2 weeks I would call them. Generally I found Australian Super pretty good once all set up, no longer with them now for other reasons.

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I was in Aust Super before I rolled my funds over to my self managed fund.

I had a lot of trouble getting the money out of them.

They reckoned they lost my application and then the second one was stalled as they said that i didn't provide the correct letter from the taxation department even thou they have access to the ATO website that states that my smsf is a complying fund.
Then finally they said they werent going to release the funds until they got the next payment from my employer who only do quarterly payments WTF...I was boiling by this stage and told them to send the cheque out which they eventually posted a month later.

All up it took over four months!

Anyway I don't think that the option to invest with the ASX which Aust Super has is that good as there are too many restrictions and most of the action in the last 12 months has been in the mid caps and small caps. Further they have things like income protection insurance that i was paying for years that I didn't even know about...I could go on but the whole industry is a scam.

Would just like to fill you in on my current approach with super.

i work for Asgard. Asgard if you dont know is a super and investment platform. Its apart of BT Financial Group.

So i've almost rolled all my super in $26k. Im 29.

As staff we pay no admin fees for life. even after leaving the business. sweet!

Ok, so if you open an Asgard Superannuation Account, with a Managed Profile setting you have the option of investing in ASX300 shares, listed funds like ARG, and also you can choose from over 300 managed funds.

So, lots to choose from.

You DO NOT need an adviser linked to the account. You can send EXECUTE ONLY share trade requests to the St George Financial planning call centre those guys will put through the trade for $20.

So my first aim is to get my super up to $50k i the short term .. say 6 - 12 months. and $100k within the next 24 - 36 months.

IMO we are entering a volatile time of the year which will produce some excellent buying opportunities. This is when i plan to place my first share purchases within super.

I recently did my first managed fund buy and sell and locked in $800 profit within a month.. haha and that was off the default advance fund.

Capital gains are taxed at 16.5 tax within super regardless of the time that share/managed fund is held. IMO a great trading environment.

So i plan on getting to 100k. putting perhaps 70% in the like of ARG for div reinvestment etc and using 30% for growing companies like AUT for example. And probably stocks with good leverage to gold/silver and whatever else looks good at the time.

This is by no means advice, just sharing my story in the hope of possibly helping people.

I've also submitted request to our product team to add ETF's like VAS etc so then riding the asx 200 will be that much easier to trade.

thesnowyforest said:

Ok, so if you open an Asgard Superannuation Account, with a Managed Profile setting you have the option of investing in ASX300 shares, listed funds like ARG, and also you can choose from over 300 managed funds.



I've also submitted request to our product team to add ETF's like VAS etc so then riding the asx 200 will be that much easier to trade.

Click to expand...

You mite want to tell them to redesign their site too cos i cant see anything about personal super...i see business super but no personal super, retail super...am i missing something?

So_Cynical said:

I'm very confident of my ability to ‘beat the market’ and the woeful returns achieved by the vast majority of investment managers working in the super industry as i have had some success following my low cost averaging strategy using my own money and simply plan to continue with that strategy inside my AustSuper account, the way AustSuper allows me to trade will mean i have a lower margin for error due to having to place orders for execution on a weekly basis and accept the average (Monday) price rather than my price.

Click to expand...

Are you kidding? That's about as unworkable as they come.

If you are targeting 9% change in price, a few ticks here and there will eat quite a chunk of that away. Your advantage in super is only the difference between your marginal tax rate and the super tax rate of 15%...

Say your marginal tax rate is 39% (or may be 30%) you made 9% on your $7K position = $630 profit, the difference in tax implication is only $151 ($95 if 30% marginal tax rate). That is 2% (1.3%) on your position size. The disadvantage in execution is too great for such a small potential gain... plus I bet you their broker commission is not as competitive as someone outside like Bell (or IB).

I think for long term buy-and-hold type transactions this arrangement is probably OK. For short term targeting small moves it feels like the wrong tool.

So_Cynical said:

You mite want to tell them to redesign their site too cos i cant see anything about personal super...i see business super but no personal super, retail super...am i missing something?

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http://asgard.com.au/Products_&_Services/

If you go to eWRAP - this is the one you are after..

Also note you can only have up to 30% of your whole portfolio in one stock..

skc said:

Are you kidding? That's about as unworkable as they come.

Click to expand...

Time will tell of course...its certainly not an ideal set of rules that AustSuper have given me but that's the best option there is inside a retail/non SMSF.

skc said:

If you are targeting 9% change in price, a few ticks here and there will eat quite a chunk of that away. Your advantage in super is only the difference between your marginal tax rate and the super tax rate of 15%...

Say your marginal tax rate is 39% (or may be 30%) you made 9% on your $7K position = $630 profit, the difference in tax implication is only $151 ($95 if 30% marginal tax rate). That is 2% (1.3%) on your position size. The disadvantage in execution is too great for such a small potential gain... plus I bet you their broker commission is not as competitive as someone outside like Bell (or IB).

Click to expand...

You mite of missed the little + after the 9%, i know that at some point in time ill get frustrated and will simply take a 9% profit just to move on, however i will always be wanting a % profit much higher than that...i understand the numbers as ive traded this system for over 3 years now and i am acutely aware that if i average only 9% per exit and each trade takes 10 or 14 months to complete im going to get nowhere in a hurry.

As for tax...its whatever it is...my alternative is to not trade in my super and accept a low risk 8 or 9% PA or have a go and try and better it...ive chosen to have a go and document it in this thread.

skc said:

I think for long term buy-and-hold type transactions this arrangement is probably OK. For short term targeting small moves it feels like the wrong tool.

Click to expand...

Its the only tool i have in a retail or non SMSF...as i said its working for me with my money outside super so will work inside super too...just not as quick and easy and with the level of control that i would like.

So_Cynical said:

Time will tell of course...its certainly not an ideal set of rules that AustSuper have given me but that's the best option there is inside a retail/non SMSF.

Click to expand...

Forget what I said.. I was comparing your trading inside vs outside super.

But you are comparing the return of your own trading vs lazy funds option in super.

So fair enough.

Superfund Trade #1 was entered this week, GFF @ 1.03 smiley because that's the price i wanted, unfortunately due to 1 of my roll-overs going missing (the super industry still uses checks ) and AustSuper mistakenly charging me 14% tax on the roll-over that actually made it into the fund (since reversed) i could only buy a limited amount of the shares i wanted and will top up the GFF holding (if its still cheap) when funds permit, hopefully the week after next all will be sorted..

Best to leave individual stock discussion in the relevant stock thread

https://www.aussiestockforums.com/forums/showthread.php?t=13089&p=632951&viewfull=1#post632951
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When you buy shares within super can you join dividend reinvestment plan to build your holding, participate in any SPP's etc?

poverty said:

When you buy shares within super can you join dividend reinvestment plan to build your holding, participate in any SPP's etc?

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No...under the current rule set AustSuper uses, DRP's and SPP's etc etc cannot be participated in...with a SMSF im reasonably sure you can participate.

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As of Friday my other roll over has finally showed up so i will be placing 2 new buy orders tonight, SGP and BBG or PTM or APN still undecided which.

So_Cynical said:

Superfund Trade #1 was entered this week, GFF @ 1.03 smiley because that's the price i wanted

Click to expand...

Got my paper statement during the week and it turns out i paid 1.06 per share, from memory the opening price and that days high...so safe to assume my order was filled at the open and at market and that really pisses me off even though i was expecting it....i personally never buy at market, i set my price and wait and that's not how AustSuper instructs Macquarie to execute their orders.

Seriously how hard would it be for AustSuper to instruct Macquarie to simply allow a buy or sell order to just sit there for a week or 2...i cant figure how and or why they don't allow this?

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So_Cynical said:

As of Friday my other roll over has finally showed up so i will be placing 2 new buy orders tonight, SGP and BBG or PTM or APN still undecided which.

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I ended up buying SGP and ABC ~ mostly cos ive really got the hots for ABC : anyway
on Monday SGP traded between $3.45 and $3.51 so i should be slightly in front on that entry and ABC traded between $3.04 and $3.08 so should also be slightly in front on that one too.

Probably buy a few more GFF on Monday to take the position up to near the 7.3K mark....then its just a waiting game to see how long it takes one of the stocks to get to the 9% profit point.
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Almost 4 months since my last post in this thread so time for an update....as we all know the market has tanked in the last 4 months and so ive taken the limited opportunity's i have to average down into my stocks that have fallen the most (at the time)

My super portfolio consists of only 3 shares so its simply been a matter of buying into the stock that's fallen the most, when ive had the funds to do so....2 buys.

• ABC 2.73 on the 18/07
• SGP 2.70 on the 15/08

Smallish averages down but still worth doing in the overall scheme of things...its clear now that its going to take a little while to exit these positions and establish free carry but ...it is what it is, and i shall soldier on, collecting dividends along the way.

SGP - Stockland Activity chart below.
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So_Cynical said:

My super portfolio consists of only 3 shares so its simply been a matter of buying into the stock that's fallen the most, when ive had the funds to do so....2 buys.

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Just did a quick check on your 3 stocks. It appears as though GFF has in fact dropped the most in 12 Months and the dividends have been chopped by half, did you top up or exit on this one? What is your plan with it?

By the way, how is the new trading platform on OZ Super? I really like the way they are going forward with that as I don't really want to start my own SMSF. Seems like a great way to do it yourself with no accounting hassles. Is it up and running and have they fixed their service up yet? Cheers.