Question: Given an expected Grexit, and European Central Bank money printing (quantitative easing), the Aussie is probably at its highest relative to the euro for the moment. Do you have any ideas on how to diversify a portfolio slightly to take advantage of this arbitrage?
Answer (By Paul Rickard): There is no really easy way for a private investor to take advantage of an expected lower AUD/EUR.
If you are happy to take on equity risk, buy some shares (or ETFs) on the London Stock Exchange or the German DAX. Try iShares or Vanguard for local (UK or German listed) ETFs.
Alternatively, try some of the Australian listed ETFs – Vanguard All-World ex-US Shares Index ETF (VEU) or iShares Europe ETF (IEU) are probably the closest.
On the currency side, you could open a euro or GBP bank account. HSBC, CitiBank and Commonwealth Bank all offer these (possibly the other majors as well). Don’t expect to earn any interest – and watch the buy/sell spreads on transfers!
Question 2: With June 30 fast approaching can you convert your SMSF to a TTR at this late date?
Answer 2 (By Paul Rickard): Yes, you can convert your SMSF to a TTR at any stage – provided you have reached preservation age (for most people, this is 55 years).
While there is benefit in doing it at any time, there is nothing magic about 30 June. In regards to taxation on your fund in 14/15, you will only get the benefit for that fraction of the time that you were drawing a TTR – likely to be only a few days. Your effective tax rate for 14/15 will still be very close to 15%.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.