And now for something completely different

Hostplus SMSF investments

In a move that should be applauded, one industry fund - Hostplus - has opened up its investments to the SMSF sector, instead of campaigning against it.

Readers of this column in the past would be familiar with my criticism aimed at the constant antagonism levelled toward the SMSF sector from the industry funds.

Time and time again they have attacked SMSFs for no apparent reason apart from the fact their members with the highest balances are exiting in favour of better retirement income solutions made possible through SMSFs.

Well, all of a sudden, and out of the blue, it appears some of the wiser heads in the industry fund community seem to have adopted a more conciliatory approach in an attempt to coexist with what they would consider their new public enemy number one: SMSFs.

I’m referring to Hostplus’s decision to offer some of the investment options available to its members to SMSFs as well. Certainly a novel approach and one seemingly employing the theory that you can attract more flies with honey than with vinegar.

Why do I think this is a smart move? Well, I’ve always said the best way fund managers or service providers can best add value to SMSF clients is to offer them something they can’t do for themselves.

In the funds management world it means providing investments an SMSF member could not necessarily access as a standard retail investor. In this instance it may mean a range of funds with restricted access to wholesale investors, only all of a sudden they can be in play for SMSFs.

Better access to asset classes such as infrastructure, and Hostplus has already confirmed this will be the case with its offering, would be another benefit along those lines.

Further, the development also provides the potential for SMSFs to more accurately replicate the returns of the industry funds certain sections of the industry rave about.

Personally I do not support the theory SMSFs significantly underperform their industry fund counterparts, but bodies such as the Productivity Commission certainly do and to this end making industry fund investments available to SMSFs can be seen as a solution.

But the really smart move is Hostplus having a mechanism in place to engage meaningfully, and in a cooperative way, with SMSFs. This means in the event of incapacity or the death of a member triggering a decision to wind up an SMSF, Hostplus presents an immediate and familiar rollover solution.

Most importantly for all parties it indicates perhaps there is a glimmer of hope the war between factions of the superannuation industry may abate.

I’ve often said the vitriol spewed by industry funds may be designed to damage the credibility of SMSFs, but it also damages themselves – almost like cutting off their nose to spite their face. On a macro level, all this achieves is giving the public a reason to lose faith in the super system.

While this initiative does not exactly represent a Kumbaya moment for the superannuation industry, it certainly is a step in the right direction and shows if the willingness is there, different sectors of the industry can actually be complimentary toward one another.

Certainly something we have not witnessed previously, so well done Hostplus.


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