Two financial services firms are warning SMSF investors against complacency as the “fear index” approaches a record low.
Grant Samuel Funds Management and Triple3 Partners have cautioned SMSF investors not to take market returns “for granted”, with the CBOE volatility index (VIX) hitting a low of 11.32 in May.
The VIX index, often referred to as the “fear index”, is a measure of expected volatility on the S&P500 Index over the next 30 days.
Triple3 Partners founder and chief investment officer Simon Ho said in the past a low VIX has frequently been a “harbinger” of significant market falls.
“This period could be the calm before the share market storm,” he said.
“The last time the VIX was at these low levels was at the start of 2007, the period immediately before the onset of the GFC,” he added.
Mr Ho said he expects volatility levels will start to climb by the end of 2014, with a lot of “uncertainties” ahead in world economies.
“There is the housing bubble in China, which will start to deflate at some point; the experimental quantitative easing taking place in Japan, which will have unknown consequences; and the US’s decision to unwind its quantitative easing program, which should see asset prices and risk premiums in that country return to more normal levels,” he said.
“Investors can’t afford to be complacent about their portfolio diversification,” Mr Ho added.
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
23 Jun 2016Trustees reminded of ‘positive’ CGT news as EOFY loomsBy Katarina Taurian
22 Jun 2017Westpac veteran and SMSF exec set to departBy Staff Reporter
22 Jun 2017ATO sets compliance targets for auditors in 2017-18By Miranda Brownlee
22 Jun 2017CGT relief still plaguing trustees, says former ATO execBy Miranda Brownlee
22 Jun 2017Consultancy firm predicts low take-up of SMSF robo-adviceBy Miranda Brownlee
21 Jun 2017SMSFs warned on timing traps with unit trust transfersBy Miranda Brownlee
- view all
Trustees reminded of ‘positive’ CGT news as EOFY looms
A capital gains tax (CGT) issue that was causing confusion in the industry has been cleared up by the ATO, and professionals are being remin...read more
ATO sets compliance targets for auditors in 2017-18
The ATO will extend its focus on auditor independence in the next financial year, examining the referral sources of audits, and will also sc...read more
CGT relief still plaguing trustees, says former ATO exec
SMSF trustees continue to be under a number of misconceptions in relation to CGT relief in terms of what assets are eligible for the relief ...read more
- view all