My SMSF

My SMSF – a tilt to SMAs makes running the fund easier

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Key points

  •  A history of almost 20 years makes running the fund easier.
  •  Performance for the last two years is above 15%.
  • SMAs are a good option for certain markets.

Name: Knox Superfund
Where do you live? Sydney NSW

How long have you had your SMSF?

Since 1996

Why did you start it up?

To enable me to access and hold high yield blue chip stocks that I wanted to own and not have traded. I wanted the DRP along the way.

How big is it?

More than $500,000

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

Initially I relied on a broker for direction but as time has progressed and buying has become more easily accommodated, thanks to discounted trading engines like Etrade and Commsec, it has become easier to implement. I now use SMAs with managers and a couple of managed funds for certain markets, alongside some ETFs.

Are you pleased with its performance?

Yes overall the volatility has been pretty good and capital growth reasonable when compared against a peer group of professionally managed balanced portfolios of similar asset allocation. The last two years ended June have been above the industry average with returns above 15%. The last three years and five years have been better than the Mercer median, thanks to some pretty strong weightings to cash.

What is your asset allocation?

The asset allocation bands enable significant overweight and underweight allocations to growth assets and I employ dynamic asset allocation at manager level so that it can move discretionally. The current weighting is approximately 57% Australian equities (of which 10% is in bank stocks on a hold and forget policy, 10% is in actively managed small caps, 20% is in a concentrated large cap SMA manager and 7% is in an MDA). 35% is in international equities across managed sector funds using passive indexing for the majority and 10% in emerging markets. The rest is in cash and term deposits. I am about to invest new cash into the portfolio and it will be weighted to international equities so that the overall portfolio lifts to 40% minimum in international equities.

What are your favourite investments/stocks and why?

I’ve long believed in the too big to fail policy of the banks and the oligopoly effect of charging whatever they want to increase their profit. As such holding them has been easy. My favourite investments though are the emerging markets and small cap allocations as they tend to buck the trend of markets overall and can provide a significant return at the right moment. I’m happy to reduce exposure when they hit high double-digit returns.

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

I use an MDA operator, an SMA provider and an adviser. However my investment allocations are primarily my own as to who gets what.

What investments do you have outside of superannuation?

Unlisted investments in two illiquid businesses with five year horizons, strong investment build up in residential principal property that I partially regard as a long-term tax-free investment at the point of downsizing. Shares in listed employer that I work within.

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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