Superannuation and share market outlook

Hi all you Shares guru's,

I received a wonderful email from Australian Super advising that my investment in their Balanced fund grew 8.25% in the year ended 31 December 2016. So I thought I'd ask my paid "advisor" how he was doing given he manages the majority of my nest egg, and it seems to be declining year on year. His response is below, but the one line i keep focussing on is this:

He went on to say I am well placed for a coming market correction. I'm tempted to think "salesman caring for commissions" but as I know nothing of the stock market I was wondering what your view is on an imminent correction in the market?

I'm thinking closing the account with him (invested in $US, Fixed term deposits and BetaShares Australian Equities Strong Bear Hedge Fund) and moving it all into Australian Super. Now to be fair I stopped contributing to his fund in 2015 and now contribute to Australian Super as their life & income protection was about a third the price, and their returns seem far better. But perhaps he is right.

For those that are interested his full response follows:

Your thoughts?

 

There is some sense to what he says. It's been pretty hard not to make money on paper in the Trump rally. But none of us really understand why.

I'd have made 4x the returns putting everything into the index instead of my speculative stocks, until today when I got 14% in one stock in one day with more to come.

Never know whats around the corner. Diversify!

PS Not an expert.

 

The hedge fund you are invested in is a short. That is, your investment will grow if the market goes down. There is a lot of noise about a big correction but noone knows when it will happen.
Australian Equities Strong Bear Hedge Fund | BetaShares

 

This joker is playing at being George Soros but will end up like LTCM.

Shorting the ASX as the US market has shot the lights out? Ok, there is correlation but ASX is absolutely not wildly overvalued.

Personally I will never look at any long/short funds. One side has a long run headwind that it can't overcome.

Stick to Australiansuper, but you might want to think about which of their options suits your long term goals - it may not be the balanced fund.

 

When is it coming

Market Timing much...

 

You are well placed - IF - there is a market correction.

He will be "right" eventually, a correction will happen at some time.

You are paying (presumably high fees) someone to invest in a short fund that has high fees.

Go and google the accumulation index and ask why someone would short it given that noone knows when the next crash will be - your adviser even admitted he doesn't know.

Super is a long game, compounding is your friend.

I wrote accumulation index above, which isn't correct by my understanding, as you are shorting the asx200. By going long you get the accumulation returns.