Low interest rates and the relatively flat performance of Australian shares have increased the attraction of global equities for SMSFs, but where are the opportunities and what are the risks? Miranda Brownlee reports
Most SMSF practitioners and their SMSF clients are aware of the benefits of diversifying their exposure beyond just cash, Australian shares and property. This is particularly pertinent at the moment, with the Reserve Bank of Australia keeping the official cash rate at historic lows. Furthermore, the ASX 200 has risen by only 0.86 per cent in the 12 months to 16 July 2015 and with just a 3 per cent return.
On the other hand, Insync Funds Management chief investment officer Monik Kotecha says global indexes, such as the NASDAQ, have risen by 5.5 per cent in this same 12-month period while other indexes, such as the CAC 40 (a French stock market index) are up by almost 15 per cent.
SMSF practitioners and their trustee clients are, it seems, starting to cotton on to these global trends, despite a historic tendency to invest domestically. UBS Wealth Management’s head of investment strategy, David Sokulsky, says that in the past five years, the proportion of SMSF assets invested in international equities has increased dramatically. This is in part the result of advancements in technology improving access to foreign shares.
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Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.