Van Eck Global’s ETF business, Market Vectors, has issued a warning to SMSF trustees to avoid holding too much cash in their portfolios.
Reflecting on ATO figures indicating that SMSFs invested $154.1 billion in cash and term deposits as at September 2013 – representing 29 per cent of all SMSF assets – Market Vectors managing director Arian Neiron said this allocation does not sufficiently mitigate inflation.
“SMSFs should consider diversifying their investments with ETFs in 2014 to build their wealth over time, rather than seeing the value of their cash eroded by tax and inflation,” Mr Neiron said.
“With interest rates falling to their lowest in years, and Australia’s inflation rate rising in recent times, the real returns on cash are falling. Australia’s inflation rate surprised the market in the final quarter of 2013, climbing to 2.7 per cent, up from 2.2 per cent in the December 2012 quarter.
The sharp fall in the Australian dollar is expected to keep upward pressure on inflation through 2014
“As well as term deposit investments, SMSFs have a wide range of listed investment options, such as ETFs, which can be used as a long-term growth strategy or to gain short- to medium-term equity market exposure while deciding where to put funds longer term.”
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 18 Oct 2018Aussies say royal commission won’t change their view of adviceBy James Mitchell
- 18 Oct 2018Hire younger advisers to get younger clients, paper suggestsBy Adrian Flores
- 18 Oct 2018Synchron launches app for adviser developmentBy Reporter
- 17 Oct 2018Private banking has no place for bad advisersBy Eliot Hastie
- 17 Oct 2018CBA admits failure to tackle conflicted adviceBy James Mitchell
- 16 Oct 2018NAB to address advice issues in $314m payoutBy Eliot Hastie
- view all