How do I add gold exposure to my portfolio? Is there upside in investing in international property? Is Flight Centre a buy? If I am over 75, can I still make a downsizer contribution to super?
Question 1: What are the best ways to add gold exposure to an SMSF?
Answer: There are three main ways. Firstly, you can buy gold directly from gold dealers or places like the Perth Mint. The latter is guaranteed by the WA Government.
Secondly, you can buy a gold ETF. The three main gold ETFs are GOLD, PMGOLD and QAU. The latter is currency hedged, for the first two the exposure is to the US dollar price of gold.
Finally, you can buy gold company shares. Companies such as Northern Star (NST), Regis Resources (RRL) or Evolution (EVN).
My suggestion…buy an ETF. Go for the GOLD ETF from Global X. Here is a link to an article on this subject from a couple of months’ back. https://switzerreport.com.au/is-it-time-to-buy-gold-and-how-can-you-do-it-2/
Question 2: Do you see any upside for overseas property? I am using the ETF, REIT, which has been struggling for some time; presumably, because of interest rate increases and more folk working from home.
Answer: I can’t say that I have ever considered investing in international property on a broad style basis. I invest in international shares because there are so many companies/industries that aren’t available in Australia and also because the Australian market is concentrated in a couple of sectors; I invest in international fixed interest because the Australian debt markets (outside government) aren’t broad and are not well developed (for example, we don’t have a high yield bond sector); with international property, I am not sure I can make the same case. Maybe there are some sectors we don’t have…but I can’t readily identify them. If I had the cash, I would certainly consider buying individual properties offshore – but international real estate investment trusts – I am not sure.
The Van Eck FTSE International Property (Hedged) ETF (REIT) tracks an index comprising real estate investment trusts (REITs) and companies listed on the exchanges of the world’s major developed economies (ex-Australia) that own real estate assets and derive >70% of their EBITDA from rental income. Performance of the index has been ordinary. Over the last 5 years, -0.49% pa and over 10 years, 4.32% pa.
Looking ahead, a fall in global interest rates would be a positive. This is on the cards, but it might take a few years to play out.
Question 3: Flight Centre (FLT) has had a nice recovery. Is it still a buy?
Answer: Flight Centre has gone for a nice run. The latest catalyst was an earnings upgrade – Management raised the guidance for FY23 EBITDA by 7% to between $295m and $305m. At the midpoint of $300m, this is quite a big jump on last year’s loss of $183m.
The broker analysts feel that it is fairly priced, with the consensus target price being $24.49, about 7% higher than the last ASX price of $22.88. There are 3 “buy” recommendations and 2 “neutral” recommendations.
I guess I am more in the “neutral” camp. Whilst management paints a rosy outlook for both the leisure and corporate markets and has done a great job recovering from Covid, I have a sense that ‘legacy’ travel systems remain under attack.
Question 4: If you are a person aged 80 without a super fund, can you downsize, open a super fund and make a downsizer contribution to it?
Answer: Yes, you can make a downsizer contribution to super at age 80. There is no maximum age for the downsizer contribution.
You can only “downsize” once with a maximum contribution of $300,000, so I wouldn’t contemplate opening my own fund but instead, contact an industry super fund such as Australian Super.
