Flexible allocation Index Super

Discussion in 'Superannuation, SMSF & Personal Insurance' started by hvdw87, 23rd Sep, 2020.

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  1. hvdw87

    hvdw87 Well-Known Member

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    Hi all,

    Trying to find a Super provider that allows for the selection of multiple index tracking investments. Essentially, want to be able to allocate my super to a combination of VAS, VGS, VGE (or similar) at low fees.

    Sunsuper appears best value for me currently, but at first glance it looks like you can either invest fully in something similar to VAS or VGS but not both.

    Any help would be appreciated.
     
  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    All funds will have a approved product list and an approved investment strategy with restrictions. The trustee is responsible and licensed and wants to avoid harm through unqualified choice or enhanced risk. APRA regulate this. The fund will have individual limits varying from 0% and have a upper limit. Some classes have a lower limit eg cash must be at least $XXXX at all times. If you fall below that rule they will dispose of investments without asking. A direct investmnet fund will have higher fees than default options or lifestyle choice investment options.

    Some employers may be unable to contribute to these types of fund choices as the account will not necessarily be a MySuper compliant fund.

    A SMSF has the option of freedom to determine a bespoke investment choice subject to its investment strategy which is a element of the audit to ensure investmnets are consistent with its own strategy. . In some instances a risk management statement must be adopted and followed by the SMSF trustee where the investment has elements of risk through currency, leverage or other factors eg Investing in BBOZ as it is leveraged and take a opposing view to markets. A SMSF will have no "fees" but will have adminstration and operating costs which are pretty well fixed and dont vary much with member balances eg Audit, Accounting, SMSF levy, ASIC fees etc. This may cost $2500pa for example. If member funds are 100K thats a 2.5% "fee" equivalent that reduces investment income but if its $500K then its 0.5%.
     
  3. DoggaPP

    DoggaPP Well-Known Member

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    Just use ChoicePlus inside Hostplus - it has a flat fee of $180ish a year and you can access most major ETFs
     
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  4. hvdw87

    hvdw87 Well-Known Member

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    Hi Paul,

    Thanks for the feedback. There is a bit in there to consider. I had no idea about the MySuper compliance so will need to check with my employer I guess.

    SMSF will be of interest, but the fees do not make sense at my current investment balance.
     
  5. hvdw87

    hvdw87 Well-Known Member

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    Thanks. I will look in to them. Are you aware whether this is direct ownership through HOSTPlus or whether they use some derivatives or convoluted investment pyramids as some of the other funds seem to have?

    With SunSuper, I believe that it is direct ownership of essentially VAS, VGS.

    As an aside, I have sort of answered my own question, I missed the fact that with Sunsuper you can choose up to 10 direct investments.
     
  6. DoggaPP

    DoggaPP Well-Known Member

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    Yeah it is direct.
    FAQ
     
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  7. hvdw87

    hvdw87 Well-Known Member

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    Am I reading this right that you need to have a minimum 20% in term deposits, a maximum of 80% in EFT's/stocks and a maximum of 20% in any specific ETF/stock?

    If so, that probably pushes me towards Sunsuper.
    upload_2020-9-23_11-29-14.png
     
  8. DoggaPP

    DoggaPP Well-Known Member

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    No
    You can only have a maximum of 20% in any one holding AND 20% needs to be sitting in a Standard Hostplus option of your choice (this is where your employee payments land and you transfer them as you like in and out of this)

    So as an example you might have 20% in Indexed balanced in Hostplus and then in the 80% of Choiceplus across 20% each of VAS, VGS, VGE, IVV
     
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  9. DoggaPP

    DoggaPP Well-Known Member

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  10. hvdw87

    hvdw87 Well-Known Member

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    OK that makes a lot more sense.
     
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  11. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Thats pretty standard. Remember you are choosing but the trustee is the legal owner, the licensed entity and must satisfy its obligations under law. They will impose conditions. Its your member account but not your money (yet)

    No responsible trustee will allow "all in" on a single investment. such as property and minimal cash. Even the ATO wrote to SMSFs with this fault in their investment strategy

    Even sunsuper have limits
    PDS Download (Page 14+)
    They describe direct as follows :Active investment options that have multiple underlying investment managers; providing diversification across investment managers and reducing the risk of exposure to any one investment manager or style

    They dont actually have a direct investment option. You can elect Australian shares and they manage this as a strategy to a benchmark. They actively manage it. Note too the spread is a fee of sorts...eg Hostplus have a 0.19% spread and some trading limits. Sunsuper have a base fee + a performance related fee and spreads.
     
    Last edited: 23rd Sep, 2020
  12. hvdw87

    hvdw87 Well-Known Member

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    Not sure I am completely following you Paul (btw the file didn't upload).

    My understanding from Sunsuper is that I could go all in on "VAS" or "VGS" or any other combination of up to 10.

    upload_2020-9-23_13-43-52.png
     
  13. Redwing

    Redwing Well-Known Member

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    Can you allocate the full 100% of funds, or do they only allow you a certain %?
     
  14. Redwing

    Redwing Well-Known Member

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    I should read everything first :D

    Be better if they let you use your full 100%
     
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  15. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Cant answer that as it involves licensed financial advice.

    They describe direct as follows :Active investment options that have multiple underlying investment managers; providing diversification across investment managers and reducing the risk of exposure to any one investment manager or style.

    Note also the words on Page 23 of the PDF under the heading Active Investment Options

    Direct options would not have a benchmark as it would be the member determining the outcome. This seemed quite apparent that investments arent member directed or direct. Very few funds offer direct choice to members.

    Super investment options - Moneysmart.gov.au

    This may be old but it may provide some help for finding a direct member option. Read the PDS. And update on current fees too.

    Which super funds allow you to invest in ETFs & LICs? - ETF Watch
     
    Last edited: 23rd Sep, 2020
  16. hvdw87

    hvdw87 Well-Known Member

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    Ah, I took this as being the underlying ETF that is benchmarked against the ASX 300(VAS).
     
  17. Zenith Chaos

    Zenith Chaos Well-Known Member

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    I'm finding there are issues with all super options. I'll stick with Sunsuper until further news about their index providers post Vanguard. They offer low fee indexes with allocations of your choice, however, as explained in another thread, there are issues with the pooling of funds.

    If you go to a direct investment option you will pay admin and management fees that are significantly higher so that your investments are not pooled. Remember you pay the super fund fees but you are still paying the ETF /LIC fees.

    SMSF resolved this if your balance is high enough, but I see several examples of people trying to wind up their SMSF, which implies that they are not ideal due to fees and other complications.

    All I want is a provider that can give me the lowest total fees on a fixed cash / fixed interest / bond buffer with the rest in VAS, VGS and VGE equivalents. I will withdraw cash and top it up if the markets are not down or if I run out of cash.
     
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  18. BunnyXiao

    BunnyXiao Well-Known Member

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    Agree. I got myself out of Care Super after they offered the Macquarie platform as it never worked and I lost out on trades and was mightily peeved. Useless customer service. Hostplus has less options but at least it works
     
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  19. hvdw87

    hvdw87 Well-Known Member

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    I ended up joining Sunsuper and have gone with an allocation of VAS, VGS and VGE equivalents. Will also wait to see what Vanguard does with their Super before considering next steps.

    Balance not high enough for SMSF yet, however think I will go this way in the lead up to retirement as a means of controlling the direct assets I own during draw down phase.
     
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  20. Jingo

    Jingo Well-Known Member

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    I understand that Vanguard will set up their own superannuation fund next year meaning you could invest directly with Vanguard.