Gaining control over retirement savings

Robin Bowerman, Head of Retail at Vanguard Investments Australia.
Robin Bowerman, Head of Retail at Vanguard Investments Australia.

ONE of the main reasons why many people establish a SMSF is a determination to gain more control over their retirement savings.  

There is more than strong anecdotal evidence to support this.

Past surveys by investment researcher Investment Trends, for instance, have shown that the biggest motivation for business owners to have their own SMSFs is to gain control over their super. And business owners form a sizeable part of the SMSF constituency.

The very motive for people to establish an SMSF – to be in control – also can heavily influence, of course, how the trustees invest fund assets. This point is highlighted in a feature on Exchange Traded Funds (ETFs) written by Darin Tyson-Chan in the latest issue of SMSF magazine, published by Morningstar Media.

In the piece – headed A New Gateway of Investment – Tyson-Chan writes that SMSF trustees who preferred to construct their own direct equity portfolios now have ability with ETFs to gain the benefits of managed funds – in this case, indexed funds – “while continuing to use the direct equities approach”.

Tyson-Chan makes an excellent point. It very much goes back to the control factor.

Further, ETFs provide trustees with the means to easily control widely diversified local and offshore equity portfolios. And ETFs can provide trustees with the ability to immediately rebalance their portfolios, when necessary.

“ETFs are investment instruments that allow individuals to invest in a wide variety of diversified assets through one transaction,” Tyson-Chan adds. “That is, buying one share on the ASX. The underlying asset comes in the form of a managed portfolio of stocks from investment indices around the world, such as the S&P 500.”

With ETFs, fund trustees are very much at the controls.

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Robin Bowerman, Vanguard Investments Australia's Head of Retail, has more than two decades of experience in the finance industry as a writer, commentator and editor.

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