Flexibility remains SMSF's trump card
On the back of the second annual self-managed super fund (SMSF) report released jointly by the SMSF Professionals' Association of Australia (SPAA) and Russell Investments, Plaza Financial principal Peter Hogan said that while gauging SMSF performance may be the million-dollar question, trustees continued to be well served by the nimbleness and flexibility that SMSFs provided.
"What SMSFs do offer trustees, and what is an attraction, is that degree of flexibility in terms of the investments that they make," he said.
"For example, I have a number of clients who have managed funds and managed accounts with fund managers, and for various reasons, but they quite happily tell me that their self-managed super funds are doing quite well compared to the managed funds.
"And the reason for that, of course, is that they're all sitting in cash or term deposits," Hogan continued. "They've got positive returns!"
"And with the way the market is at the moment, a positive return is looking pretty good compared to the ups and downs and swings of the share market that we've been through."
Adding weight to Hogan's perspective, the data yielded from this year's SPAA/Russell SMSF report tells a similar story, with most survey respondents citing risk reduction as the key driver of their asset allocation in 2011.
"So one of the things that self-managed super funds do offer in terms of a return is a higher degree of flexibility for trustees to move the whole of the fund into more defensive assets when they think it's appropriate," commented Hogan.
"And naturally, that's as compared to writing off to a fund manager and saying that they want to cash out this investment, which takes a day or two, and then saying that they want to invest in this other investment and that takes a day or two again.
"But when markets improve, they're equally well served," he added. "Because at that point they can again be a little bit more nimble and move back into markets when it's appropriate as well."
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