Diversifying assets becomes easier with price point parity
SMSFs can now save money and diversify their assets to ensure adequate liquidity with a new pricing model from leading fintech specialist, Saxo.
Adam Smith, CEO of Saxo Australia, told SMFS Adviser the new transparent pricing model will help SMSF investors diversify across asset classes and international markets.
“The benefits of diversification are starkly apparent in Australia, where the local ASX 200 index rose only 7.8 per cent in 2023 compared to much bigger gains internationally,” Mr Smith said.
He said global markets faired far better with the US S&P 500 rising 24 per cent, NASDAQ 100 54 per cent, and Dow Jones Industrial recording a 14 per cent index. Additionally, the German DAX index increased by 20 per cent and the Japanese Nikkei 225 index was up by 28 per cent.
Mr Smith said for many years Australian investors had been locally focused and missed the big gains offered overseas.
“SMSFs don’t want to be investing in markets where things aren’t moving. Historically Australians have focussed on ASX as it has been expensive to buy US stocks,” he said.
“You could argue that for the past four years, the Australian market has been a waste of time in terms of trying to grow wealth, but the global markets have opened to consumers now and the platforms and technology allow self-directed investors to take advantage of them.”
He said the new pricing model from Saxo includes the reduction of brokerage fees by up to 87 per cent for US equities, to as little as $USD1, and the reduction of brokerage fees by up to 62 per cent for Australian equities, to as little as $3.
“We want as a business to introduce investment opportunities globally and sharp pricing is as important as access,” he said.
“A lot of profit for investors is eaten up by fees and brokerage costs and the charge on FX is significant. A lot of people don’t understand that, but we want to make people aware of what they are paying for and that is ultimately why we think it is important to make access to international markets as cheap as possible.”
Mr Smith said it is more important now than even 12 months ago for SMSFs to have liquid assets and diversify their investments as cashflow will become vital with new legislation.
“In SMSF land, funds have a lot of investments in property but also listed securities, and there is security in buying stocks in for example, the US and being able to move in and out of those cost-effectively,” he said.
With the age of those establishing SMSFs continuing to decrease, Mr Smith said the ability to control their investments has become more attractive.
“There have been conversations from the government about nation building and the honeypot of superannuation,” he said.
“The younger cohort of superannuants are now wanting something they can control rather than have their savings used for government projects, and the platforms now available to invest in global stocks give them the opportunity to build a diversified portfolio.”
