Name: Jeremy Cooper (former Chair of the Government’s ‘Super System Review’)
Age: 54
Other members of the SMSF: My trusting wife.
How long have you had your SMSF?
Since 1999. It is in its 16th financial year.
Why did you start it up?
Interest in investing and I was self-employed as a law firm partner.
How big is it?
We are about halfway to where I think we need to be in order to retire. The ‘rule of 72 says I would have about 11 years to go in order to double the size of the fund at my historical rate of return.
Is it more or less difficult to manage than you thought it would be?
About the same. Keeping track of its actual performance with a sufficient degree of accuracy is quite tricky.
Do you enjoy managing it?
It comes and goes, but I have always enjoyed the markets and the challenge of investing.
Are you pleased with its performance?
My geometric mean pre-tax annual investment return from 2000 to 2013 is 6.4%.
The post-tax figure would be very similar (possibly higher) because of the level of franking credits. This is still not that great.
My guess is that I have always taken a fair degree of equity risk and, in my earlier days, had a tendency to ‘catch the knife’ by buying unloved stocks that didn’t love me either. Losing money affects returns.
Can you give us some numbers around performance over the last 1, 3 and 5 years?
Geometric mean annual pre-tax investment returns for 1 year (FY13) 34.0%; 3 years (FY11 to FY13) 13.9% and 5 years (FY09 to FY 13) 9.1%.
I suppose I should do some after-tax numbers at some point!
What is your asset allocation – i.e., what percentage in domestic equities, international equities, fixed income, cash and other?
It breaks down to:
Equities: 64% – these are substantially LICs
REITs: 3%
Cash: 3%
Alternatives: 21%
Fixed income/credit: 9%
There is quite a high international equity exposure through my selection of LICs. The fixed income component is substantially US credit. The alternatives are substantially international as well. At a rough guess, over 50% of the portfolio is invested ex-Australia.
This is, of course, not a retirement or pre-retirement asset allocation.
What are your favourite investments/stocks and why?
I am a big fan of LICs because they are very efficient and transparent and don’t need a lot of attention. They have been solid performers as well. In the past, I have had much more exposure to individual stocks.
What investments do you have outside of superannuation?
Mainly liabilities, but some shares as well.
Do you use an advisor or any kind of service provider?
I have always used an accountant for the compliance stuff, but I have recently started using a full service financial adviser. The adviser is working with me to de-risk things a bit and to move a bit more into $US denominated investments.
Is there anything else you would like to tell us about your SMSF?
It is very compliant. It has to be!
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