My SMSF

My SMSF – Barrie Dunstan

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Barrie Dunstan

SMSF members: Myself and my wife

How long have you had your SMSF?

My SMSF goes back more than two decades (when they weren’t so much in fashion).

Why did you start it up?

It was a logical progression for an investment journalist with a special interest in superannuation. Two other motives: my wife (the only other member) had retired from nursing before acquiring any super savings and I planned for the subsequent opportunity to transition seamlessly from the accumulation to pension phase.

Is it more or less difficult to manage than you thought it would be?

It has been easy to manage. Now 75 and fully retired from day-to-day journalism, I’ve got plenty of time to devote to fine-tuning the SMSF and other family investments (listed shares and an investment flat). With both fund members drawing pensions, I aim at least to earn more than enough to cover the minimum pension drawdowns.

Are you pleased with its performance?

Over the past seven years, the fund’s earnings have kept ahead of pension payouts, earning just over 8% compound per annum with only two, small negative years in 2007-08 and 2008-09. It now stands at more than $1 million.

What is your asset allocation?

After a lifetime progressing from a stock market speculator to an investor, my basic approach uses a firm, strategic asset allocation, along with a sometimes-eclectic stock selection. The GFC confirmed my safety first stance – I currently have 60% in shares and hybrids and 40% fixed interest and cash. This keeps me from sudden rushes of blood when the share market starts firing up. The cash/fixed interest is half in a bank cash management account and half in bank term deposits of a year or less. About 20% of the portfolio includes listed hybrids (mainly banks) and a few listed notes and debentures.

The portfolio is almost all local, with only a small, 3.5%, allocation in an S&P 500 ETF (up 33% since it was bought in early 2012). I’m cautious about the potential exchange rate volatility in overseas shares.

I’m also low on property exposure, with only a token holding in the SPDR property index ETF. I regard our exposure to residential property through the family home and an investment property (totalling about 50% of all family assets) as enough real estate for a moderately adventurous asset allocation. I’m suspicious of the current hype about property, after a lifetime among stock market spruikers.

What are your favourite investments/stocks and why?

Within the equity portfolio, I’ve been happy with the relatively safe growth from infrastructure stocks – mainly Transurban (a favourite with its inflation-linked toll revenue) and some gas pipelines. I was annoyed to have another favourite, Australian Infrastructure, taken over and I’m eyeing Sydney Airport to get infrastructure back to about 10% of the portfolio.

The search for yield means the big banks have a 40% weighting and Telstra another 8.5%. Despite a continuing liking for Telstra (see my Telstra story here), I’m loathe to lift its weighting further. The other mainstay is a combined 10% holding of Wesfarmers and Woolworths. The oldest holding is Coca-Cola Amatil, at an average cost of less than half current prices.

BHP and Woodside (8% of the portfolio) are the major exposure to resources. I quit Rio Tinto (at a nice profit) in 2009 in a premature hedging against the China iron ore boom. This risk averseness is quite a change for a young speculator, who held Oil Search shares at less than 50c in the late 1950s!

Do you use an advisor or any kind of service provider?

For all the administration, I rely on, and trust, an accountant whose firm has administered the SMSF since inception, while I act as the chief investment officer. For more than a decade, I’ve used a small, private client broker where I have a good personal relationship. Apart from routine dealings, we meet half-yearly for talks on strategy.

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.

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