Switching options in super

[Bourseboy]

I am trying work out a strategy to effectively switch from International Shares to Cash option.

My super is with Australian Super and my wife’s is with Hesta.
Some of you may know how these funds do switches. Any thoughts welcome,

Hesta uses Unit Pricing, which I understand.
Australian Super uses Daily Rates. I am unable to reconcile their Daily Rates with their Cumulative Rates.

Taken from Australian Super website
‘Investment switch requests received before 4pm AEST/AEDT on a business day are effective the next business day. It usually takes two to three full business days for investment switches to show in your online account”.

Taken from Hesta website
“Valid Investment switch requests received by 4pm AEST/AEDT on a business day will receive the unit price calculated at the close of that business day. It takes up to two business days to collate valuation data and reflect this in the unit prices to apply to your investment”

My strategy - comments please, also wrt timing
Wed 9 April S&P500 closed at 5456 (up 9.5%, 474 points). This is 6 am our time on Thursday 10 April. If on Thursday 10 April before 4pm I put in a request to super fund to change from International shares to the option that is cash or mainly cash the international shares that the super fund has invested in should be worth about 9.5% more than the previous day and hence my super should be up about 9.5% (and in/going into the cash option). The changes would only be shown a business day or 2 later for Hesta (up to 3 full business days later for Australian Super).

Assumtions:
-The unit price of cash option is little changed
-S&P500 reflects changes in prices of the shares super fund had invested in.
-At close of business on day of my request (Thursday 10 April) super fund sees and uses the share prices as they were at last close of stock exchange/exchanges (I assume mostly USA stocks, so probably mostly NYSE, reflected by S&P500).
It is not clear which day’s share prices Australia Super would use.

Best wishes to all and hope you navigate the present troubled water with success.

 

[rolly1]

Yea this is a dogs breakfast how they word it. If it says switch done by 4pm you are not gonna get the prices for that day. Impossible for them to do the trades necessary. Int switches done by 4pm at best you will get the closing price of those markets the next morning so 1 day after you have looked at the prices. It was one of the reasons I went with Stake smsf as Host+ took 2 days to action changes which is **** in this age of technology.
My wife's super is with AMP and I have to make the switch 1hr before close to get that day's closing price

 

[Dona Ferentes]

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[DaveTrade]

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View attachment 197307

It would be nice if they had a line showing the 3 year return as well. The ten year return starts to loose meaning when you get to 60 or 70 years old.

 

[DaveTrade]

I am trying work out a strategy to effectively switch from International Shares to Cash option.

My super is with Australian Super and my wife’s is with Hesta.
Some of you may know how these funds do switches. Any thoughts welcome,

Hesta uses Unit Pricing, which I understand.
Australian Super uses Daily Rates. I am unable to reconcile their Daily Rates with their Cumulative Rates.

Taken from Australian Super website
‘Investment switch requests received before 4pm AEST/AEDT on a business day are effective the next business day. It usually takes two to three full business days for investment switches to show in your online account”.

Taken from Hesta website
“Valid Investment switch requests received by 4pm AEST/AEDT on a business day will receive the unit price calculated at the close of that business day. It takes up to two business days to collate valuation data and reflect this in the unit prices to apply to your investment”

My strategy - comments please, also wrt timing
Wed 9 April S&P500 closed at 5456 (up 9.5%, 474 points). This is 6 am our time on Thursday 10 April. If on Thursday 10 April before 4pm I put in a request to super fund to change from International shares to the option that is cash or mainly cash the international shares that the super fund has invested in should be worth about 9.5% more than the previous day and hence my super should be up about 9.5% (and in/going into the cash option). The changes would only be shown a business day or 2 later for Hesta (up to 3 full business days later for Australian Super).

Assumtions:
-The unit price of cash option is little changed
-S&P500 reflects changes in prices of the shares super fund had invested in.
-At close of business on day of my request (Thursday 10 April) super fund sees and uses the share prices as they were at last close of stock exchange/exchanges (I assume mostly USA stocks, so probably mostly NYSE, reflected by S&P500).
It is not clear which day’s share prices Australia Super would use.

Best wishes to all and hope you navigate the present troubled water with success.

Hi @Bourseboy , a bit of feedback for you. I think that all Super funds use unit prices (not sure) but it is most likely how Super funds are structured. The other thing to consider is 'International Shares' does not mean S&P500 shares on NYSE, they invest all over the world in shares and each Super fund would choose their own mix of shares to invest in. Another consideration is the S&P500 index is a weighted index so the returns of this fund are not the general returns of all shares.

Another consideration is that switching your Super investment options is a big picture strategy, i.e. long term directional changes in the markets, so one day would be insignificant in your yearly returns.

 

[Smurf1976]

I can't confirm how this particular fund does it but for those I'm familiar with the way it works is that the request must be in before 4pm (or other time as specified) to get that day's pricing.

Eg you submit the request at 2pm on Tuesday, the switch will occur based on closing prices that day at nominally 4pm. The actual transaction may be implemented later (eg overnight), but it'll use the pricing at that time.

If you submitted the request at 5pm on Tuesday, the switch would occur based on closing prices at 4pm Wednesday, since it was submitted after the cut-off time on Tuesday.

Note - time zone in Australia will usually be NSW unless stated otherwise.

 

[qldfrog]

And to add some info:
Please remember that the super fund "cash" option might be very different from cash yield that you get on saving account or TD.
Some of these options are invested in bonds, bonds etf etc which means not very intuitively that while your cba saver account or TD is at 4%, you could get a negative returns if the bonds coupon values decrease

So be very careful at what cash is