Insights

Feature

Portfolio performance comparison March 2019

Nick Shugg provides the latest SMSF tables for the period ended 28 February 2019 to assess how well client investment portfolios are performing and analyses some performance comparison considerations.

Every SMSF trustee has a reason for wanting to invest in a particular mix of asset classes. This is often to do with risk management and the desire to obtain a secure income stream.

Therefore, comparisons against industry super funds are largely irrelevant for SMSF trustees, who may be deliberately investing quite differently, and the performance tables may turn over the next decade.

If you are investing in a diversified mix of asset classes and have outperformed the SMSF 60 Benchmark Portfolio over the past 12 months, it’s important to ask yourself why that happened.

In a time where information about particular stocks flows quickly and is available to all investors, it is very hard to consistently outperform markets through any stock selection decisions. Outperformance usually comes from a decision to be overweight or underweight a particular asset class or sub-asset class.

This is no different for industry super funds. Over the past decade some of them have performed very well.

But why? Is it repeatable?

With 32 years’ experience in investment markets, I do tend to think in longer-term cycles. Was that outperformance due to their superior ability to consistently pick the right stocks? Or was it due to the fact they were overweight property during a particular decade when property boomed?

Will they continue to be rewarded for an overweight position in property over the next decade?

Is it possible they have unlisted properties on their books that have not yet been revalued since the property market has fallen and since some retail and commercial rentals have been renegotiated at lower levels?

What’s hot

Australian listed property continues to boom, despite residential property collapsing. Over the past quarter it has delivered a return of 10.57 per cent. The only sector that has been higher over that period was Australian resources at a staggering 22.44 per cent.

High-yield shares have also recovered well over the past quarter with a return of 10.14 per cent.

What’s not

Developed markets have performed strongly in recent months, leaving emerging markets behind. The return from emerging markets over the past month was 1.92 per cent, compared to the broader Australian share market at 5.97 per cent.

Healthcare has also slowed as have government bonds after a good year.

Gold has been a loser, as expected, at a time when shares are up strongly.

 

Asset class (%) SMSF

20

SMSF

60

SMSF

P1

SMSF

100

Australian shares 17 50 35 85
International shares 2 7 0 11
Listed property 1 3 0 4
Direct property 0 0 50 0
Fixed interest 74 35 10 0
Cash 6 5 5 0

 

Returns per period as at 28 February 2019

(%)

SMSF

20

SMSF

60

SMSF

P1

SMSF

100

Month 1.78 4.15 2.25 6.62
Quarter 4.32 6.80 2.67 9.47
Half-year 3.07 1.90 -1.14 0.81
One-year 5.46 5.03 -0.15 4.56
Three-year 4.00 6.08 5.50 8.15
Five-year 4.80 5.20 6.19 5.61

 

Disclaimer: 1. These Benchmark Portfolios should not be taken as any form of advice. They are designed for information only. Speak to your professional adviser before taking any action. 2. While SMSF Benchmarks Pty Ltd has taken every care in preparation of this information, the company, its directors and/or employees cannot be held responsible for any loss caused by action taken resulting from these benchmark portfolios. 3. Past Returns are no guarantee of future returns.

Nick Shugg is the founder of SMSF Benchmarks.

Our Story

selfmanagedsuper is the definitive publication covering Australia’s SMSF sector. It uniquely offers both online and print publications tailored separately for SMSF professionals and individual trustees participating in the fastest growing and largest sector of the superannuation industry. As such, it is a must read for those wanting to stay informed about the latest news, regulatory developments, technical strategies, investments, compliance, legal and administration issues concerning SMSFs.

Copyright © SMS Trustee News 2019

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital