THE first S in SMSF stands for: self-managed, but Self-Managed Super Funds often are anything but self-managed. The investing usually is self-managed, but few SMSF trustees draw up their own financial statements, prepare and lodge their own tax return and the audit, of course, must be done by an independent outsider.
The fees and charges of external service providers can make your eyes water, by the way.
A lot of Self-Managed Super Funds could already be called EMSFs (the E stands for ‘externally’) rather than SMSFs, but you can now take one more step. You can actually invest in an industry super fund.
That would make your SMSF truly externally managed.
Industry super fund Hostplus has opened up 6 of its 23 investment options to SMSFs. Other not-for-profit funds are expected to follow if Hostplus is successful.
The options available to SMSFs include Hostplus’s flagship Balanced Option, which produced a very good return last financial year.
However, Hostplus also offers infrastructure investment options, such as airports, toll roads and power plants in Australia and overseas.
Hostplus opening itself up to SMSFs represents a capitulation by the superannuation industry. For decades, the superannuation industry has been railing against self-managed super. They called SMSF trustees inept investors. They pointed out the excessive fees charged by accountants and auditors servicing SMSFs. They suggested SMSF balances were too low.
Hostplus has changed the industry tune, and it’s easy to see why.
As at March 2019, there were almost 600,000 SMSFs in Australia with more than 1.1 million members.
Although this represents less than 5 per cent of Australia’s total population, the funds account for more than $747 billion – or about 27 per cent – of the $2.7 trillion invested in superannuation.
Hostplus must have thought: if you can’t beat them, join them.
Or rather: you join them.
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