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Trustee spotlight: Trevor’s advice on asset allocation and managing an SMSF from his 15 years of experience

Since starting his SMSF in 2002, Trevor has been burnt twice but this hasn’t stopped him from continuing to manage his SMSF. Trevor shares his experiences with changing his asset allocation, administration fees and how to drive the best return out of your SMSF.



The genesis for Trevor Jones’* fund occurred in 1998 when he left a 30-year career with a major bank and received a redundancy payout. “Then I had to work out what to do with my super money, which had to be rolled over from the bank scheme.”

So he invested it in managed funds and then in 2002 Trevor’s accountant suggested he consider opening a self-managed super fund (SMSF).

“Some of the retail managed funds I had invested in were not performing all that well. I’m a little financially savvy, having worked in banking for 35 years. And I like to invest in shares.”

So for me, opening the fund was not just about financial independence, it gave me an interest as well. Given the funds I had invested in were not performing that well, I thought I would manage the money myself.” 

Subsequently, he revisited the funds in which he was already invested, redeemed some of them and recycled the money into other managed funds he thought would be better investments and also invested directly in the stock market.

Today, Trevor holds 11% of his assets in managed funds, 50% in cash, and 36% in direct shares and some commercial real estate trusts. He acknowledges his allocation to cash is high, like many SMSFs, and he’s looking at that at the moment.

“Like many investors I was wounded in the financial crisis; the ASX still hasn’t recovered. But now, I want to start to improve my return, which means I have to invest some of that cash.”

He also had a small holding in the failed agricultural investment scheme Great Southern, by which he’s still burnt. “I didn’t lose a lot but I worked for 52 years and so I want to protect the money I’ve earned.” 

At the moment, Trevor is looking to put some of his cash to work by buying more direct shares, with a preference for blue chips stocks. He already has high exposure to the major banks and miners, as well as an oil and gas company.

“Looking at the blue chip shares over the years, BHP Billiton and Rio Tinto have always done well for me, as have the banks. They offer good dividends and the noise around them at the moment will subside sooner or later and they will get back to normal.”

As he increases his exposure to the stock market he intends to reduce his cash holdings to around 35% to 40% of the fund. 

But he doesn’t have any bond funds. “Whenever I research it, it never looks like the right time to invest.”

In terms of his views of capital markets and the macro-economic environment, Trevor says he doesn’t expect interest rates to rise for a long time, which will reduce the role cash and fixed interest investments can play in the portfolio in terms of their ability to generate revenue.

Trevor does his own research to form his investment views, and subscribes to newsletters and magazines.

His advice to other trustees to properly manage their fund is to always ensure they maintain their knowledge and understanding of financial markets. 

“You need to be active. A lot of SMSFs don’t do much. I’ve been guilty of that too until recently when I retired and I have had more time to run the fund. I’m reading more now. You need to have a reasonable amount to open an SMSF. They used to say you could open one with $200,000 but I think you need at least $500,000.”

In terms of returns, the fund achieved 7.5% in 2017, taking into account fees and taxes and including growth in his share portfolio. He attributes this to the strong performance of the bank stocks in his portfolio and the impact of dividends on returns. 

Trevor says it costs him about $5000 to run the fund each year, which the investments have to make up before the fund starts generating a return, also taking into account the cost of about $2000 to start the fund. 

“You need to dig deep and really look at what it costs you to run the fund. You also do need to be financially literate to run a fund – you need to understand how shares and dividends work, for instance. Consider whether you’re capable or if you need financial advice on tap all the time. For me, I’m happy doing it myself.” 

*Name has been changed

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