Author: markbeveridge

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About Mark Beveridge

As one of the founders of Superfund Partners, we started with a vision of building a SMSF administration service that did all the things that I wished for during my years of outsourcing to other accountants. We set about with a clean sheet of paper and open minds to build a service to enable all SMSF trustees - whether they be independent thinkers who control every investment decision, or those who collaborate with a financial planner - to have access to a high quality service at a very reasonable price. I am so proud of the awesome team of professionals that we have created at Superfund Partners. Personally I have 28 years of experience providing advice. I hold a Diploma of Financial Markets, a Graduate Diploma of Financial Planning and I am recognised as an SMSF Specialist Advisor with the SMSF Association.

smsf diversify portoflio

Is your SMSF adequately diversified?

SMSF trustees need to truly understand diversification and better diversify their portfolios.

The benefits of a well-diversified portfolio are numerous but the key ones that SMSF trustees should focus on are the benefits of mitigating volatility and short-term downside investment risks, preserving capital and the long-run benefits of higher overall returns. By spreading an SMSF’s investments across different asset classes and markets offering different risks and returns, SMSFs can better position themselves for a secure retirement.

However, did you know that 82% of SMSF trustees believe that diversification is important but in practice many do not achieve it?
This is because half the SMSF population cite barriers to achieving diversification. The top being that it is not a primary goal for SMSF trustees, and they believe they have a lack of funds to implement it.

Furthermore, 36% of SMSF trustees say they have made a significant (10%) asset allocation change to their SMSF over the last 12 months. This demonstrates that SMSFs may not be actively restructuring their portfolio on an annual basis to respond to changing market conditions.

Financial Market Update | March

Beware the Ides of March! The month of March lived up to its brutal reputation that all started on 15 March 44BC when Marcus Brutus stabbed Julius Caesar to death in the Roman Senate.  Red ink flowed during March like the blood of Caesar. However, despite the dramatic headlines, markets have merely returned to a normal level of volatility.  In fact, 2017 was the unusual year, with its very low volatility.  We need to keep some perspective and understand that it is the norm, rather than the exception, to see a 10% correction at some point during any given calendar year. And when you do see that sort of correction, it often makes the 12 month trailing performance look very ordinary, as you can see in the 12 month numbers in our table.

 

  INDEX RETURNS AS AT 31 March 2018 (%)
  1 month 3 months 6 months One year
Australian Shares -3.77 -3.86 3.48 2.54
International Shares -0.44 1.24 7.46 15.15
Domestic Listed Property 0.11 -6.19 1.12 -0.07
Global Listed Property 2.37 -5.30 -1.85 1.23
Australian Fixed Interest 0.84 0.87 2.32 3.28
International Fixed Interest 0.84 -0.09 0.81 2.89
Cash 0.14 0.43 0.85 1.73
Market Indices
S&P/ASX 200 Accumulation Index
MSCI World ex Aust TR Index $A
S&P/ASX 300 Property Trusts Accum Index
FTSE EPRA/NAREIT DEVELOP NR INDEX (A$ HEDGED)
Bloomberg Composite 0 + Years
BarCap Global Aggregate Index Hedged AUD
Bloomberg Aus Bank Bill Index

 

Financial Market Update | February

The month of February finished up being almost flat, a surprise after the deep selloff early in the month.

Listed property, (local referred to as A-REIT’s and global as G-REITs) was down again on the rising interest rate curve. Although one never wants to stand in front of a freight train the value now emerging in listed property starts to look interesting at these levels.  The longer term outcome will depend on bond yields.

Bonds are in the spotlight as a leading culprit in the increased volatility and the sell-off in the aforementioned A-REITs. The ten year US bond yields that we discussed at length in last months post continued to rise, peaking at 2.94% on 21 February. The yields appear to have run into some resistance at that level, but this could be merely a consolidating pause.

During the month, the S&P 500 index of US shares had a loss of 11.83%, which takes it into the ‘correction’ territory.

Financial Market Update: A review of December 2017

The month of December capped off a great year for investment markets.  Good returns with unusually low volatility provided ‘many happy returns’ for balanced and growth investors.

Australian fixed interest turned in a negative return, as longer term rates rose during the month. A widely expected rise in the US Federal Reserve rates pushed their Fed Funds rate up to 1.5%, the same as the Australian Official Cash Rate. The only negatives for the major asset classes for the month of December were International Shares, and Australian Fixed Interest. In fact, international shares were mostly positive in December, but the 3.0% rise in the Aussie dollar turned those gains into a negative return for the month.

On the currency front, the strong Australian dollar was in fact more about the US dollar which weakened by 10% versus a trade weighted basket of currencies over the 2017 year. This is a perverse outcome very few would have predicted given the US central bank was just about the only major global central bank raising rates during the year.

Financial Market Update: A Review of November’s Performance

The S&P/ASX200 Accumulation has now put in two solid months, following the October gain of 4.01% with another 1.64% in November. Twelve month returns are 14.61% almost double our expected annual 12 month returns of around 8.5%. This surge may have pulled forward some of the next twelve months expected gains.

 

Global Markets

Global markets also posted a good month, with gains of 3.24% and three month gains now at 11.33%. Emerging Markets, which we have favoured in our Managed Portfolios, are up 29.27% over the last year. We mentioned in the last update that Emerging Markets remain somewhat cheaper than developed markets, with arguably more to gain from structural reforms and demographic changes.

 

Real Estate Trusts

The A-REIT sector (real-estate trusts) saw gains of 5.29% for the month of November. This sector is coming back into favour after a sell-off based on concerns about higher bond rates and the arrival of Amazon which may (or may not) further hollow out the Australian retail sector.

Financial Market Update: A Review of October’s Performance

The S&P/ASX200 Accumulation index finally put in a surge in October, with a gain of 4.01% in the month, shaking off a 6 month malaise. Twelve month numbers are back up to 16.13% almost double our expected annual 12 month returns of around 8.5%.

 

Global Markets

Global markets also had a good month, with gains of 4.29% and a rolling 12 month return that tops the charts at 22.53%. Emerging Markets posted even higher returns with a gain of 5.92% in October, and one year returns of 25.49%. Although vulnerable to negative events in the short term, Emerging Markets remain somewhat cheaper than developed markets, with arguably more to gain from structural reforms and demographic changes.

 

Bond Markets

Bond markets improved in October, posting a gain of 1.09% on average. However one year gains are still muted at 1.64%, held back by long bond yields that are drifting higher, albeit at a slow pace. 

August-Financial-Marketing-Update-2017

Financial Market Update: A review of August’s performance

The Australian market had a fair month in August. Mark takes us through the performance across the board to prepare us for what’s to come.

Stockmarkets

The Australian market had a fair month in August, with the ASX 200 Accumulation Index posting a 0.71% return for the month, which annualises out to around 8.5% which is within a few points of our expected long term returns.  The commodities price was the action sector with Energy shares (+6.07%) delivered the biggest gains.

The rolling one year historic returns for the ASX200 Accumulation index is now 9.79%, rolling off some good periods in FY 2017 which saw a great return of 14.09%. Sentiment on Australia remains patchy. Banks, our largest sector have plenty of sceptics due to the high capital city house prices, and highly leveraged consumers.  Our other big sector being materials, seems captive to sentiment about what China will do next.

Looking globally, the MSCI World Index gained 0.85% in AUD terms during August,

Property Marketing update July 2017 (1)

Property Market Update July 2017

The property market, you will probably know that we don’t often comment on residential property. Due to it being such a heterogeneous asset class (the opposite to homogenous) there are pockets performing differently everywhere. However, given that most of us will have some exposure, we have included some observations from SQM Research to update you on the broader market.

SQM Research - Property Marketing 2017

 

 

Source: SQM Research

 

Perth and Darwin prices are the only ones showing year on year falls. We recall only 2 years ago being offered apartments in booming Darwin to ‘sell’ to our clients. Our scepticism and avoidance of conflicts of interest kept us well away from that disaster.
Over the month of June, Sydney prices are showing a small decline, though year on year was strong. Melbourne too was a standout, with even bigger gains than Sydney. Hobart off a low base showed strong gains as well.
While we are not local market experts in each suburb,

Financial Market Update July 2017

After a big sell-off in May, (-4.01%) the S&P/ASX200 Accumulation index managed a small gain of 0.17% for the month of June.

That was better though than Global markets, where the MSCI World index (in Aust Dollars) lost 2.54% for the month.

Bond markets sold off during June as interest rates rose, and the A-REIT sector (real-estate trusts) also had a fall, losing 4.51% over the month.

In spite of those falls, stepping back a bit to look at the whole year shows a much brighter picture of returns. The table below looks at the major liquid asset classes over the last ten years.

 

Financial Market Update July 2017 - Index Returns as at 30 June 2017

 

There are a few notable points here.  The one, three and five year returns for Australian and International shares have been very positive overall. Yet, when looking at the 10 year numbers, the returns from those assets are below the Fixed Interest returns.  And, when looking at fixed income returns we see that the returns this year have been low,

The Australian Budget 2017 - Summary by Superfund Partners

The Australian Federal Budget 2017: Getting into property and getting out of property, left field bank hit & investment in infrastructure.

The Australian Federal Budget 2017: Getting into property and getting out of property, things from left field & investment in infrastructure.

 

Wow, has this budget got a deal for you!

You always want what you haven’t got.  When you’re young you are thinking about schemes to get your access to your super money to buy a house and when you’re old you’re looking for ways to get it back into super. Trust us, we have dealt with clients at both ends of that spectrum.

We all know these new budget measures will do nothing for actual house price affordability in Melbourne and Sydney! That will be left to the dual devices of eventual oversupply and interest rates that will rise (one day). But it is an interesting feature of the budget nonetheless.

So, how does it work. Let’s focus on the first home buyers.

First Home Buyers

Our early read on the proposal looks like this:

From 1 July 2017,