When we talk about DIY super funds, our minds do not run over the small APRA funds (SAF) in general. By and large, the term ‘DIY’ in Super funds connote self-managed Super funds. The beauty of SMSF is that it allows you great flexibility in terms of your investment and gives you a very high degree of control over where you want to invest and just how much you want to invest. This is something that industry Super funds have missed all through.
How things might change for the Super fund trustees
Responding to the stiff competition offered by the SMSFs, industry funds are also offering investment options like Term Deposits, selected ETFs, and ASX300 listed shares to their members now. This move is expected to give the industry funds a little more acceptance from the investors who have always wished to control a decent part of their investments.
Degree of independence won’t still be equal to the DIY investors
The industry fund members can always bank on their trustees to keep making the investment decisions, but from now they will have a greater role to play if they want. Obviously, the choices of direct investment will not be as spread out as in the case of DIY investors. For instance, the members will only have a say over investments restricted to the “approved products list”. Also, the members won’t have any access to the high hybrid securities, one of the key techniques used for enhancing yields.
All this said, the degree of independence being made available to the Super fund members will still see them doing a lot of great things. Just think about how the SMSF fund members transfer their personal shares to their Self-managed funds and you will get the picture.
Share transfer is possible for the industry Super fund trustees,too
In making such share transfers, members of SMSFs (and entire DIY clan) reduce their tax liabilities on any dividend received through the Super fund. Yes, there can be a CGT issue, but it is well compensated for. Of course, the very same transfers can also be used in minimising the personal debt burden. And now all this is possible for the industry fund members, too!
What is your opinion on the recent slur of criticism faced by the SMSF industry?