Trustee spotlight: Dennis' learnings from 20 investments outside of his SMSF
Having only started his SMSF this year, Dennis Mason is a relatively new trustee. However he does take an active management approach to his 20 investments outside of super, and intends to use these learnings for investing within his SMSF.
Dennis Mason is a relatively new self-managed super fund (SMSF) member, having only opened his fund earlier in 2017 on his retirement.
“I retired in April this year and rolled over my company superannuation into my self-managed super fund. I started making investments from August,” he explains.
When he set up the fund, Dennis consulted an investment adviser to discuss his investment strategy and approach. “He put together a proposal, and I took that and tweaked it and then started investing.”
Dennis explains he has a number of investments outside the super environment, and this helped shape his approach to investing inside his super fund.
“I don’t want to replicate what I have outside super, I want to diversify my investments. So I have looked for a variety of managed funds in different areas. I have about 20 funds across areas such as emerging markets and global and Australian shares, as well as infrastructure and local and global bonds.”
As a result, his fund is much more diversified than many SMSFs, which predominantly hold Australian equities and cash.
According to the Australian Taxation Office’s latest figures
, for funds with between $200,000 and $500,000 in assets, the top two holdings on an average basis by asset class in SMSFs are cash at 47.56% and listed equities at 24.23% of the total portfolio.
“I do have some cash and I also have three ETFs, as well as exchange-traded bonds,” he explains.
Dennis takes an active management approach to his investments outside the super environment, and intends to pursue a similar strategy for the investments inside his SMSF.
“Obviously, I don’t need to do much at the moment, having just set up the fund. In a year’s time I will review my portfolio's performance with my adviser, looking at how my original strategy has performed and whether it requires any changes,” he explains.
The fund’s target annual return is 4% to 6%. “That's why I have invested in managed funds, rather than kept the money in cash. The fund has met its return target since I opened it, and I’m happy about that.”
“I’m pleased with the funds the adviser picked. Some have gone backwards, but not very far, others have gone forwards and some have gone forwards quite well.”
Aside from taking investment advice, Dennis informs his views by reading widely. “I have a number of subscriptions. I also read financial magazines and newspapers. Being retired, I now have the time to do the research.”
Overall, Dennis is focused on ensuring the assets in his SMSF are properly diversified - a sound approach to preserving the fund’s wealth over time.
“It means if one of my investments doesn’t do well, it won’t have a major impact on both my income and capital values.”
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