8:03AMFriday Apr 18th, 2014

Who Builds the Best Portfolio: Trustee or Adviser?

Money361An analysis by CoreData found that a self-managed super fund (SMSF) portfolio is likely to differ depending on whether it is managed by trustees alone, or shaped by financial advisers.

Portfolios whose trustees had an adviser were more diversified.

They had higher allocations to property than trustee-only funds, and more than twice the fixed income allocation (11.1% as against 5.2%) and a 10.9% exposure to international shares (compared to 5.6%).

Funds built without financial planner advice held more Australian equities at 49.7% than those with advice, at 35.2%.

One tactic both had in common was a higher than industry-standard exposure to cash and term deposits.

CoreData senior consultant, Angus Dennis, said that this was an effective way to maintain returns yet reduce volatility, given Australia’s historic competitive yields on those investments.

The current shift away from cash in the changing market will need careful analysis by advisers and trustees alike, according to Wealth Professional.

Off-setting that risk, insurance within SMSFs is rising thanks to the trustee perception of it as tax-efficient, the report said.

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