SMSF trustees lag on portfolio construction
Specialist self-managed super fund (SMSF) advisers have raised concerns that SMSF trustees have an inadequate knowledge of alternative portfolio construction strategies.
The comments back up recent Russell Investment research which revealed that only 43 per cent of trustees indicated that they were changing their asset allocation in retirement or planning to do so.
Managing director of Capel and Associates Rick Capel said an inadequate knowledge of alternatives, as well as inertia, were the reasons for trustees not building a more diverse portfolio.
He nominated hybrid shares, managed futures, buy-right strategies and international shares as alternatives that trustees were unwilling to consider.
There was a strong antipathy towards fixed interest strategies used to generate income in retirement, and they should be re-introduced to investors at the allocated pension phase, he said.
SMSF trustees very rarely had a plan or strategy to maintain their asset allocation over time, said Fiducian Financial Services adviser Michael Dale.
A great number of people who have an SMSF don't really know what they should be doing, he said.
Trustees often work alone on their own asset allocation, he added.
However, AMP SMSF administration director and SMSF Professionals' Association of Australia chair Andrew Hamilton said that SMSF investors were adjusting their portfolio and asset allocation on a very regular basis and the recent SPAA research may be a reflection of that.
SMSF investors were already in the process of reviewing what they were doing when they moved into retirement, he said.
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