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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    Hopefully. Been hearing about it for a couple of years now. I’m sure it will happen given their offerings overseas, just a question of when...
     
  2. Paul@PAS

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

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    Why? Vanguard cant manage investments. You do. You will choose and be 100 % right or wrong. Vanguard is not a certainty and a specific etf has zero diversification risk
     
  3. Redwing

    Redwing Well-Known Member

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    There's a write up here on HostPlus, REST, and Australian Super and associated costs

    https://captainfi.com/barefoot-investor-superannuation/

    The Barefoot Investor suggests Hostplus, Rest, VisionSuper, AustralianSuper, and SunSuper as the best super funds in Australia in 2020.
     
  4. mkbonline

    mkbonline Well-Known Member

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    Does Hostplus, SuperSuper ,Qsuper or any other super offer NDQ as investment option? Mostly, i have seen VGS and VTS.
     
  5. hvdw87

    hvdw87 Well-Known Member

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    Why do you say this?
     
  6. Paul@PAS

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

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    Just because a ETF has portfolio diversification it doesnt mean the member account / fund is diversified.
     
  7. Redwing

    Redwing Well-Known Member

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    Any updates on this i.e. Aus Super, Hostplus, etc for flexibility similar to an SMSF investing in ETF's/LIC's etc?
     
  8. hvdw87

    hvdw87 Well-Known Member

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    I'm still with SunSuper with an allocation of their "Index" products. Waiting to see what else comes up.

    Question for those in the know, if someone was to alter their existing allocation within Super fund (say reduce/increase International Shares Index by a 5%, by selling down one of your other allocations), does that incur a tax liability?
     
  9. ChrisP73

    ChrisP73 Well-Known Member

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    The short answer to your question is yes, but it's already been accounted for in the unit price so you won't see a reduction in your funds due to the switch itself.

    In a pooled superannuation fund like SunSuper there is a single tax paying entity. Unit prices are caculated to account for future CGT.

    A good summary here. A more extensive discussion here. My major gripe is the complete lack of transparency from the pooled funds on how the CGT provisions are made and defacto subsidsy of some members and some alternative investment optoins that's probably occuring that we can't see.

    Issue doesn't exist with 'direct invest' type options in the major funds (QSuper, AustralianSuper etc), or with an SMSF.
     
  10. Redwing

    Redwing Well-Known Member

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    @ChrisP73

    I've seen Hostplus Choiceplus recommended also
     
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  11. Paul@PAS

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

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    Each members account will reflect a share or element of the respective tax impacts. Super in its nature is a trust and each members has a mere interest...even in a smsf. Members never have a specific interest as such. APRA and auditors, fund trustees and staff are tasked with ensuring that allocations are fair and reasonable. This rule in contained in the SIS Regs and its subject to strict governance. So in reality many funds have sophisticated back office processes which unitise investments and startegy implemntation based around a unitised enrty and revalued exit price. So shares of profits and taxes are better allocated directly and limiting a "share" to general costs. This doesnt mean the member sees that unitisation. Its often only visible as a entry and exit price when switching strategy.

    I audited a large super fund which discoved a variance it is reserving formula's during a audit. The formula error had acted to accumulate excessive unallocated income and a consulting actuary confirmed that opinion. And it would have further expanded unless corrected. It was a extremely complex issue and APRA approval and the Trustee board was needed for the approach so no member was affected (past or present). Based on the approach I saw to that I developed a far better appreciation of the way allocations to respective members are managed and the regulatory review that occurs. It wont be "cent accurate" but will be very close. ie fair and reasonable. SIS Reg 5.03
     
  12. Redwing

    Redwing Well-Known Member

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    This was interesting from that link

    @Snowball @Zenith Chaos @MB18 you all use SunSuper don't you, how have you found that in comparison to the above?
     
  13. MB18

    MB18 Well-Known Member

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    That looks pretty good.
    Sunsuper I believe charge $1.50 pw + .1% of balance as an admin fee, and the index option are I believe .12%.

    There is no minimum cash balance. I have everything in just three different index funds.

    I've been pretty happy with Sunsuper and Ill likley stay there for the next while as I wait to see what happens with a potential Vanguard offering.
     
  14. ChrisP73

    ChrisP73 Well-Known Member

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    Investment fees (MER) for index options are .1% for australia and .11% for global developed, emerging markets is .14% - all listed here. The products and fees are comparable to what you could directly invest in. Obviously you are dependant on the sunsuper trustee continuing to provide access to investment options that work for you. Pretty safe but the future in always uncertain.

    Sunsuoer % admin fee is capped at $800 per member. So if you include the weekly admin fee for two members you will pay up to $1756 per year in admin.

    Given you can setup an SMSF (with corporate trustee) for total costs of well under $1500 with annual total costs of well under $1000 these days there does come a point for some couples that a SMSF is something to consider. Particularly so if you've reached combined balances where by the admin costs start favouring an SMSF, you're running an index all equity investment strategy and consider the issues around actual and provisional CGT in pooled funds aren't tilted in your favour. This has been covered in-depth in other threads / discussions, E.g.

    We are with SunSuper. I believe it is a great option. But, we are at that point where an SMSF is viable - combine balances high enough, expectation of significant continued contributions and far enough away from preservation age for the risk / reward balance to tip towards an SMSF (personal judgement). It's not a decision to be taken lightly particularly given that ideally both members need to be interested and capable of fulfilling their duties as trustees (directors of a trustee company). It's not something to be done just to save a few bucks on admin fees in my opinion. The opportunity cost of compounding (or lack there of) forgone funds due to CGT (actual or provisioned) due to behaviour of 'other' members in pooled fund, plus the increased certainly around control of investments, fees, and tax in an SMSF structure are the more significant reasons in my view.

    I've been planning our move on this for 18 months now. Educating myself and carefully considering the many factors. I'm reasonably certain we will be ready to make the move within the next 12 months but if it takes a little longer that's ok too.

    What's clear to me is that there is going to be ongoing consolidation of the major super funds over the next decade. The first trillion dollar super fund will come sooner than we expect.
     
    Last edited: 20th Jul, 2021
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  15. Snowball

    Snowball Well-Known Member

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    SunSuper has been fantastic. Set it up as 100% index international a while back haven’t touched it since. Online platform is transparent and easy to use.

    Will stay there unless Vanguard come out with a competitive offering using ETFs.
     
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  16. tedjamvor

    tedjamvor Well-Known Member

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    Yup I'm the same. Currently have VDHG replicated in Sunsuper (swapped out the 10% fixed interests with a VAP equivalent), done 12% p.a. over the past 10 years which I'm quite happy with as a benchmark compared to balanced/growth default options.

    Will hold out now for Vanguard and assess whether it's worth swapping over at next EOFY (I do direct contributions rather than getting my employer to withhold extra, so it's just easier from a paperwork perspective)
     
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