Trustees’ new focus a worry
RECENT research released by Investment Trends indicates that Self-Managed Super Fund (SMSF) trustees are focused on growing their retirement savings, but are they well equipped to do the job?
The data indicates that 57,000 trustees are now opting for a more aggressive approach to their investments, up from 37,000 a year earlier.
Also, it’s important to note that, on balance, in each of the past four years, the number of SMSFs has increased by about 20,000, which shows more Australians want to control how and where their super is invested.
The fact more trustees are choosing a more aggressive approach is not necessarily raising a red flag, but trustees need to ensure they operate in accordance with legislation and have the knowledge to properly manage risks when making investment decisions.
The concern is that they are still not required to be properly educated in the areas in which they invest super fund capital. I fear many do not fully understand the risks, particularly relating to shares.
I believe something needs to change before we see another GFC-like event. Human nature makes it likely those uneducated in how to buy and sell shares will be caught out in future, believing they are equipped to make necessary decisions when many are not. For the uneducated, the hardest decision to make is to sell.
Amazingly, the Australian market continues to trade in the sideways range that began in June. The positive about this week’s market activity is that the buyers pushed the All Ordinaries Index (XAO) above 5840 points, to 5852.7 points, before it fell away towards the end of the week as intraday traders closed positions.
In a previous report, I mentioned the market must trade strongly above this level to confirm the next rise will commence in the current quarter.
Reporting season in Australia is more than halfway through and analysts are focused on 2018 earnings estimates. Interestingly, this time last year the overall earnings estimates for the Australian share market for 2017 were downgraded. Therefore, you are wise to take this into account when making a judgment about how positive company estimates are for next year. Dale Gillham is chief analyst at Wealth Within.