My SMSF – a tilt to dividend-paying industrials

Print This Post — By Rudi Filapek-Vandyck 26 June | 2014

Founder of FNArena

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Name: Rudi Filapek-Vandyck
Age: 48
Members: Yet to start up fund

When would you start up your SMSF?

I think you preferably would have to have half a million in assets to start one up.

I know that some service providers out there are doing it for as low as $100,000 but when I talk to people whom I regard as less biased, they say you shouldn’t even look at it if you don’t have $250,000, and preferably more.

Would you use any service providers to help with your SMSF?

If it would be cost effective I would definitely have someone who would do the administration. But I will definitely be involved in the choice of assets given the work I do.

What would be your asset allocation?

Apart from the fact that I prefer relatively solid industrials that pay good dividends, I would definitely have corporate bonds. I’m not a big fan of government bonds at this point in time, but I would have corporate bonds because I believe there are some assets on the share market which are overvalued and at some point, it becomes better value to buy the bond.

But my overall asset allocation would be something like 60% in equities, 30% in corporate bonds, 5% in precious metals and 5% in cash. If the opportunity arose, I would also consider maybe 10% to 15% in unlisted assets like property, which would probably come off my equity and corporate bond allocations.

What specific stocks and investments would you have in your SMSF?

I would have the banks in my SMSF but underweight the index, not overweight. I think most portfolios in Australia have too much in banks.

I would also have Telstra. I would have stocks like Ardent Leisure and Transurban. They are all fairly strong cash-generating and dividend-paying industrials.

I like G8 Education, Breville Group and Invocare – you will see a big swing towards industrials

I would actually have zero, or very little exposure to mining stocks, including the large ones, and I might have some exposure to oil and gas but particularly to Woodside, Origin and Oil Search as they will become dividend payers in the next couple of years (Woodside already is).

My own analysis shows that solid, dividend-paying industrials with loyal customers generate the best investment returns in the long run, and at a lower risk.

If I wanted to add exposure to foreign equities, I’d opt for an ETF rather than trying to pick stocks in far away markets.

What other investments do you have outside super?

I have some precious metals and my business (this is a very important asset for me), and I have some investments in a share portfolio.

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