SMSF spotlight: Greg Maclean
Greg Maclean has run his self-managed super fund (SMSF) for 14 years. He established the fund after accepting a redundancy, using his payout to set it up, and has consistently achieved better than average performance with the fund.
“There are immense opportunities in the SMSF space, but I always invest being fully aware of the potential risks and also rewards. But for me, one of the main reasons I like to run my own fund is because it gives me more choice about how I invest,” says Maclean.
“The real advantage of an SMSF is the ability to look at a very broad universe of potential investments. SMSFs make sense if you have an alternative investment strategy and the confidence you can deliver on it,” he explains, adding that his long-term background and experience in investing has helped form his investment views.
Adding it up
Maclean’s advice to anyone thinking about setting up an SMSF is to focus on returns, after all costs are taken into account.
“You need scale for it to make economic sense. There are a series of fixed costs to run a fund and they can dent your net returns. If you also receive financial advice, this can also ratchet the costs right up,” he says.
Maclean looks after most of the management of his fund himself, which helps keep costs down.
Making the most of super system incentives is also important. He also says if the fund’s members are spouses it’s critical to take full advantage of the contribution limits and other concessions available to SMSF members, to optimise the tax benefits available.
This might include withdrawing part of his balance and then gifting the amount to his wife so she can make a super contribution if she qualifies or he could make a spouse contribution for her. After 65 a work test applies for making some concessional and all non-concessional contributions.
If Maclean’s superannuation balance was in excess of $1.6 million on 30 June 2017, he won’t be able to make non-concessional contributions to the fund. However, by balancing entitlements with his wife he may be able to maximise the total non-concessional contributions to the fund.
In terms of the assets held in the fund, Maclean has a preference for real assets and has a large exposure to infrastructure.
“Infrastructure, especially unlisted infrastructure provides very good returns at low risk. We invest through a fund that has exposure to both unlisted and listed infrastructure. It’s been important to invest with a fund manager who puts his clients’ interests first. I really invest in an investment’s management; trust is an important element in all this and I’m not on a get rich quick path,” Maclean says.
He has previously directly invested in property, but has subsequently sold this interest after being disappointed with the costs of holding the property.
“For example, the fire alarm would go off in the property and the Fire Brigade would charge $500 for the false alarm. These incidentals make a dent in returns over time.”
Maclean’s SMSF is also exposed to global assets, for instance it has a holding in an unhedged EFT that comprises a large number of US consumer staple stocks. He has a view that, in addition to a solid, low-risk fundamental performance, the fund will continue to out perform as US interest rate increases drive down the value of the Australian dollar.
Maclean is also an active member of the AMP Capital SMSF Community. You’ll find him there under the moniker ‘The Contrarian’.
“There’s a lot of good material available there and some of the debate has influenced my thinking about investing and my investment-making processes,” he says.
The SMSF Community is full of lots of great articles, tools and insights for SMSF investors. It also includes an active community of SMSF investors who are constantly considering investment ideas, the impact of regulatory changes and how to run an SMSF in the best possible way.
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