Industry super fights back against SMSF

[RandR]

http://www.brisbanetimes.com.au/mon...or-super-members-heats-up-20110419-1dlzr.html


The competition for superannuation members is heating up, as industry funds allow members to buy and sell shares from an expanded menu and make the most of the tax benefits enjoyed by people with self-managed funds.


To pick your own stocks you must have more than $10,000 in your account, invest at least $1500 in each stock and have no more than 50 per cent of your account balance in shares. Even with live trading, members will not be able to buy and sell one stock on the same day.

http://www.brisbanetimes.com.au/money/super-and-funds/competition-for-super-members-heats-up-20110419-1dlzr.html

I like these sorts of options, anybody with any of the funds that are enacting this ?

Will the industry/retail super fund industry go down the path of enabling those willing to manage their funds more actively discourage the growth of smsf ?

 

[Ferret]

I've got some direct shareholdings with the industry fund Caresuper.

Whilst I think its worthwhile, there are quite a few limitations compared with holding in an SMSF. Looking forward to seeing a few of these removed by the changes.

 

[So_Cynical]

http://www.brisbanetimes.com.au/mon...or-super-members-heats-up-20110419-1dlzr.html


The competition for superannuation members is heating up, as industry funds allow members to buy and sell shares from an expanded menu and make the most of the tax benefits enjoyed by people with self-managed funds.


To pick your own stocks you must have more than $10,000 in your account, invest at least $1500 in each stock and have no more than 50 per cent of your account balance in shares. Even with live trading, members will not be able to buy and sell one stock on the same day.

http://www.brisbanetimes.com.au/money/super-and-funds/competition-for-super-members-heats-up-20110419-1dlzr.html

I like these sorts of options, anybody with any of the funds that are enacting this ?

Will the industry/retail super fund industry go down the path of enabling those willing to manage their funds more actively discourage the growth of smsf ?

The above is why i have recently opened an account with Australian super...some one else posted here about 6 months ago that there was a couple of funds allowing direct ASX200 share investment/management...i chose Aust super because there site was very easy to use and they are really really big.

I figure this is the next best thing to having a SMSF...i mean its like having half a SMSF that costs about $200 per year (depending on your trading activities) from memory its less than $20 for a trade under 10K...once my transfers are complete ill make a thread to follow my trading activities and hopefully prove to others how great an option this really is for those with less than 100K in super.

I reckon my style of low cost averaging is near perfectly suited to the type of trading allowed by Aust super, dividends & distributions get paid straight into your account so there is no dividend reinvestment allowed and its reasonable easy to see how i could accumulate certain stocks buying low and selling high while leaving profit in with an equal amount of capital each time....and re-cycling my capital.

Great to see they are expanding the selection out to the ASX300

 

[Bill M]

As the article says, Australian Super has had it for a while. It's a great idea to be able to pick your own.

Only today I was looking at the cash returns for my industry super fund only to see 4.1% being credited for the last 12 Months. If we can do a term deposit with Rabo at 7.15% or 6.51% with UBANK we will be way out in front. Why can't they make investments like that? Bring it on, things are changing and more funds will go this way.

 

[Ferret]

Caresuper have announced that from December members in the Direct Investment option will be able to buy and sell some LICs in addition to shares in the S&P300.

Great news for me, as I was looking to build my holdings of LICs in preparation for retirement, and now I'll be able to do this inside super.

As my super balance has grown I've thought about whether an SMSF would be better. However, with this latest improvement and the fees for running my caresuper account currently capped at $800 per annum, I can't see any reason to change.

Interested to hear any other updated views on industry super funds vs SMSFs.

 

[Julia]

Ferret, there's the obvious benefit of being able to buy and sell everything listed on the ASX and make other investments as well via a SMSF. Probably depends on your balance. If it's fairly low, then it's probably hard to justify the annual fees, but perhaps consider that another $1000 or so p.a. might give you the opportunity to make a lot more money via more investment opportunities.
All the best.

 

[Garpal Gumnut]

It all sounds to me like Storm Financial.

I'll stick with my SMSF.

gg

 

[Ferret]

Thanks for the comments, Julia.

In my case, I don't think I have the financial expertise to be able to earn more by having access to wider range of investment options. I think I'm better off saving the $1000 a year or whatever the extra fees would be for an SMSF. However, no doubt there are many who will do better by making use of options only available through an SMSF. There would be no reason for SMSFs to exist if they weren't the most suitable vehicle for some people.

I've read a bit over the last year about people being encouraged to start an SMSF, when it may not be the best option for them. This is presumably to generate fees for the organisation setting up and acting as trustee for the SMSF. The most common argument is that people with low super balances are going to pay significantly more in fees. I find it interesting, though, that I can't see the value in having an SMSF myself, even though my super balance is well above what is normally considered the breakeven point for running an SMSF.

One last point. Outside of super, I find the tax quite complicated on distributions and capital gains for trusts and for some shares that have being subject to demergers etc. I like the fact that these tax complications are all dealt with by the industry fund for what I think is a very reasonable fee.

 

[Julia]

All totally valid points, ferret. I agree that there is too much encouragement for people without the necessary experience and/or acumen to get into SMSFs. It seems much of this is coming from unscrupulous property spruikers who are urging people to borrow within their SMSFs thus exacerbating the almost certain downfall that will come from buying overpriced property.

 

[Garpal Gumnut]

All totally valid points, ferret. I agree that there is too much encouragement for people without the necessary experience and/or acumen to get into SMSFs. It seems much of this is coming from unscrupulous property spruikers who are urging people to borrow within their SMSFs thus exacerbating the almost certain downfall that will come from buying overpriced property.

+1 Julia.

Best call this year, I'd be selling residential property atm.

gg

 

[medicowallet]

I'd much prefer to do my own super investing.

I haven't much time for people who make these decisions, many who cannot outperform the market, and no doubt the lackeys don't have much money or experience themselves.

Quite happy to continue to outperform the market myself.

MW

 

[sydboy007]

Thanks for the comments, Julia.

In my case, I don't think I have the financial expertise to be able to earn more by having access to wider range of investment options. I think I'm better off saving the $1000 a year or whatever the extra fees would be for an SMSF. However, no doubt there are many who will do better by making use of options only available through an SMSF. There would be no reason for SMSFs to exist if they weren't the most suitable vehicle for some people.

I've read a bit over the last year about people being encouraged to start an SMSF, when it may not be the best option for them. This is presumably to generate fees for the organisation setting up and acting as trustee for the SMSF. The most common argument is that people with low super balances are going to pay significantly more in fees. I find it interesting, though, that I can't see the value in having an SMSF myself, even though my super balance is well above what is normally considered the breakeven point for running an SMSF.

One last point. Outside of super, I find the tax quite complicated on distributions and capital gains for trusts and for some shares that have being subject to demergers etc. I like the fact that these tax complications are all dealt with by the industry fund for what I think is a very reasonable fee.

Not challenging your current attitude, because that's how I felt before getting frustrated with the Aus Super member Direct platform.

Not that I spend hours a day doing research, but I have a few basics for investing now and found after setting up my SMSF that most of the investments that paid off last year were in shares / listed securities that were outside the ASX 300 and ETFs eg best ASX300 was about 32% but best outside was around 55%

I think if they could do the current setup as the default, then have some education program for you to go through and on passing they opened up the most of the ASX listed securities for investing, I'd prob head back. If they could do a deal with FIIG or set up a true corporate bond fund that would definitely seal the deal for me. With some corporate yields still over 6% available it seems a no brainer to set up a fund, especially when a bond is (generally) a safer investment compared to a similar yielding hybrid.

At the moment it's a bit half pregnant to me It does serve well if you just want to trade in the top 300 stocks and some ETFs, and I suppose for me it was good training wheels on the journey to starting my SMSF

 

[Ferret]

I'd much prefer to do my own super investing.

I haven't much time for people who make these decisions, many who cannot outperform the market, and no doubt the lackeys don't have much money or experience themselves.

Quite happy to continue to outperform the market myself.

MW

Not quite sure what your saying here, MW. The direct investment option allows you to make your own decisions on what stocks to buy and sell, although it is limited to the ASX300.

Are you referring to LICs and the fact that the management of these decides what to buy and sell? The good LICs have a very long record of outperforming the market.

Not challenging your current attitude, because that's how I felt before getting frustrated with the Aus Super member Direct platform.

Not that I spend hours a day doing research, but I have a few basics for investing now and found after setting up my SMSF that most of the investments that paid off last year were in shares / listed securities that were outside the ASX 300 and ETFs eg best ASX300 was about 32% but best outside was around 55%

I think if they could do the current setup as the default, then have some education program for you to go through and on passing they opened up the most of the ASX listed securities for investing, I'd prob head back. If they could do a deal with FIIG or set up a true corporate bond fund that would definitely seal the deal for me. With some corporate yields still over 6% available it seems a no brainer to set up a fund, especially when a bond is (generally) a safer investment compared to a similar yielding hybrid.

At the moment it's a bit half pregnant to me It does serve well if you just want to trade in the top 300 stocks and some ETFs, and I suppose for me it was good training wheels on the journey to starting my SMSF

Good points, Syd. I think this highlights that Direct Investment is fine for some, but will be too limiting for others.

You mentioned getting frustrated with the Aus super platform. I haven't seen this, but I imagine it is similar to the Caresuper one (that's run by Macquarie Equities). I agree that the platform is not as good as other on-line broker platforms. Trade execution is not immediate, so you can't be nimble getting in out of trades. Its more suited to buy and hold for a period, not short term trading.

 

[Bill M]

Interested to hear any other updated views on industry super funds vs SMSFs.

Hello Ferret, earlier this year I opened an account with ING Living Super, so far I am very happy with it. It works similar to a SMSF with similar restrictions as Caresuper and Aust Super. The best part of this particular fund is that there is no fees for cash and term deposits. I secured a 2 year term deposit paying 4.7% PA earlier this year. There are also no fees if you put your money in their balanced option.

My plan is to park my cash in there and pay no fees, then at closer to pension time liquidate my outside super stocks and repurchase the same within super. You can have unlimited amounts in the shares option and you pick your own etf's, lic's or shares. For that they will charge you only $180 PA + Brokerage. Tax, reporting, auditing and all the other compliance is carried out by ING. This fund suits me well right now and it has very low fees. The only thing I don't like is that it won't let me buy hybrids, bonds and converible notes which I currently invest in.

More info here: http://www.ingdirect.com.au/super_and_retirement/living_super.htm

 

[sydboy007]

This fund suits me well right now and it has very low fees. The only thing I don't like is that it won't let me buy hybrids, bonds and converible notes which I currently invest in.

More info here: http://www.ingdirect.com.au/super_and_retirement/living_super.htm

Strange all these mini SMSF programs have the same limits.

Like you I have some hybrid investments, and when you can have a 6.5-7% after tax compounding return, they certainly help the balance grow with a lot less volatility than the shares of the issuer.

I'd say esuperfund is one of the cheapest full SMSF options out there, but if the ING living super was a bit more flexible I'd be very keen.

 

[sptrawler]

All totally valid points, ferret. I agree that there is too much encouragement for people without the necessary experience and/or acumen to get into SMSFs. It seems much of this is coming from unscrupulous property spruikers who are urging people to borrow within their SMSFs thus exacerbating the almost certain downfall that will come from buying overpriced property.

Spot on Julia, when the return on property is about 2%, it won't be long before the fund is assett rich cash poor.

 

[sydboy007]

Spot on Julia, when the return on property is about 2%, it won't be long before the fund is assett rich cash poor.

Huge issue that's under reported is what happens in the event of a major insurance event.

While you have a mortgage you can't undertake any kind of major renovations, so if say a fire burns down the premises, you're only option is to take the insurance money and sell what's left, which will probably mean you wont get the true value of the investment.

Labor were idiotic allowing borrowing, even on a non recourse nature, in SMSFs. We have enough geared up property in this country without needing to unleash even more specufestors into the market. Wont surprise me if they're heaving geared into property outside super as well

I'm going to be royally pi$$ed if these specufestors have major loses in a few years time and cause the SMSF sector to become overly regulated. Sinodios already seems to have his eye on the sector. Industry and retail funds both hate the SMSF sector. 1/3 of assets out of their control, and growing faster than their share of the pie.