If you are not researching into the full range of investment options available to you in 2017, designing an investment strategy which you think will be best for you, and regularly benchmarking your current investment strategy, then you are not really managing your fund at all.
You are likely to end up taking unnecessary risk for the returns you achieve, or failing to get the returns you were entitled to, given how you did invest.
There is a new documentary film which follows the citizens fighting Islamic State on a different frontier: information.
It is possible, maybe even likely, that information will achieve what a world of military hardware has been unable to achieve.
I started SMSF Benchmarks because I strongly believe that with better information, SMSF Investors should be able to achieve better outcomes over time.
People and businesses benchmark their performance… to improve… and to identify key turning points in performance. But there would be no point in benchmarking your SMSF unless there were viable alternative approaches to consider.
When I started in the industry, 30 years ago in 1987, it was hard to invest in international shares. You had to go to an Australian stockbroker who had connections to an offshore broker, and you had to place ad-hoc trades in individual companies at high brokerage costs.
But even in the last three years there has been a massive increase in the range of options investors have.
There are at least 28 sub-asset classes that you can invest in right here on the Australian Securities Exchange. You no longer need to just stick to the big banks and hope the “gold rush” continues.
As an example, here’s an extract from our Asset Class Performance Table as at 31 May 2017.
If you want high yielding shares, you can invest across ALL high yielding shares. If you believe that there is a value effect you can invest across ALL Australian “Value companies”, or ALL International Value companies.
If you believe that there is a risk premium and that small companies should be priced to out-perform large companies over time, you can invest a portion of your fund across ALL Australian Small companies or another portion across ALL International Small companies.
If you believe that the emerging markets will out-perform developed markets, you can invest a portion of your fund across ALL Emerging markets, or choose a particular geographical area.
In regularly reviewing a performance table of 28 sub-asset classes, some investors will look for momentum – asset classes which are currently going well and may continue going well for some time. Others will look for Value – asset classes which have performed poorly, and may be representing good value right now.
Whatever you do in the 2018 financial year, become empowered to manage your fund well by getting the best information available, to help you make good decisions.
Nick Shugg is the chief executive of SMSF Benchmarks, an on-line service designed to give SMSF trustees better information about how their fund is going. He has worked in the finance industry for 30 years, including as an adviser for 19 of these years.