TEST SLIDE FOR WEBINAR - nucleuswealth.com · SMSF Landscape Tim Fuller Damien Klassen The number of SMSFs increased to 584,802 The number of SMSF members is 1,129,542 The estimated

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Agenda

• Some highlights from the Australian SMSF Landscape

• 2 major mistakes SMSF trustees make in asset allocation

• Some key ways to avoid making these mistakes

• Key considerations before taking the plunge into an SMSF

Tim FullerDamien Klassen

The Australian

SMSF Landscape


The Australian

SMSF Landscape


The number of SMSFs increased to 584,802

The number of SMSF members is 1,129,542

The estimated value of SMSF assets is $749 billion

The top five asset types held by SMSFs by value are

• cash and term deposits 37% (up from 23% in 2017)• listed shares 26% (down from 30% in 2017)• real property 9% (Flat)• Trusts 11% (Flat) • other managed investments 5%.

Source ATO SMSF Statistical Report – March 2019

The Australian

SMSF Landscape



The Australian

SMSF Landscape



The Australian

SMSF Landscape



The Australian

SMSF Landscape



The Australian

SMSF Landscape



The Australian

SMSF Landscape



1st Mistake –Doing Nothing!



2nd Mistake Only sticking with

what you know



A concerning trend with

lower balance SMSFs




what you know




what you know



A Conservative

Trend


Source – Cuffelinks / Graham Hand

Invest in what you know


Invest in what you know


1. This is stock picking advice not asset allocation advice

2. These are books about how to find stocks that you are going to take big bets on

3. Asset Allocation is about diversifying

Fighting your own biases


1. Confirmation Bias

2. Optimism Bias

3. Loss Aversion

4. Self-Serving Bias

5. Planning Fallacy

Fighting your own biases


6. Choice Paralysis

7. Herding

8. Stories vs Analysis

9. Recency Bias

10.Bias Blind Spot

Bad Timing

1. Average Retail investor underperforms by around 2% p.a.

2. Most of the gap is due to bad timing –selling low, buying high

3. It’s a natural tendency that you need to fight against – have a plan and stick to it


Bad Timing

Reducing the opportunity set


Diversification

Typical Australian Portfolio

1. Residential Home

2. Investment property

3. Bank Shares

4. Hybrids

5. Corporate Bond ETF


Diversification

Typical Australian SMSF

5 different exposures to the Australian Housing Market


Diversification

Australian Banks


Diversification

Hybrids

• Not an institutional asset

• All the upside of debt, most of the downside of equity

• Largest exposures in sector to banks


Diversification


Russell Investments Australian Select Corporate Bond ETF

Source: Russell Investments

Diversification


Diversification


Name Ticker VB VNQ VEU VWO SHY TLT TIP DBC GLD

Vanguard Total Stock Market ETF VTI 0.91 0.43 0.75 0.58 -0.24 -0.24 0.06 0.29 -0.1

Vanguard Small-Cap ETF VB 0.4 0.63 0.47 -0.25 -0.28 0.02 0.29 -0.08

Vanguard REIT ETF VNQ 0.38 0.38 0.36 0.57 0.55 -0.15 0.13

Vanguard FTSE All-Wld ex-US ETF VEU 0.87 0 -0.09 0.35 0.4 0.05

Vanguard FTSE Emerging Markets ETF VWO 0.14 0.03 0.44 0.42 0.17

iShares 1-3 Year Treasury Bond ETF SHY 0.68 0.66 -0.05 0.5

iShares 20+ Year Treasury Bond ETF TLT 0.72 -0.37 0.44

iShares TIPS Bond ETF TIP 0.05 0.55

PowerShares DB Commodity ETF DBC 0.28

Final Notes


SMSFs are a great solution if you want full control.

• Ability to combine assets with spouse and family

• Much broader investment palette available• Real property with limited borrowing

• Higher levels of control

• More flexibility in retirement

• Can be cheaper than Master Trusts with higher balances

Final Notes


SMSFs are a great solution if you want full control.

• You need to ensure that you have the timeto spend on the management of the fund,for your own sake!

• Complex tax affairs can combine well with SMSF’s providing you have a good accountant / adviser.

• With complete control, comes completeresponsibility!

Final Notes


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Documents

TEST SLIDE FOR WEBINAR - nucleuswealth.com · SMSF Landscape Tim Fuller Damien Klassen The number of SMSFs increased to 584,802 The number of SMSF members is 1,129,542 The estimated