A new world of global opportunities is opening up to self-managed super funds (SMSFs) through the latest product innovation to reach the platform space.
SMSFs’ traditionally limited allocation to international equities is set to rise significantly in line with the emergence of international managed portfolios, according to a white paper released by leading- edge wealth management platform provider HUB24 (ASX:HUB) today.
According to figures from the Australian Taxation Office, SMSFs have less than 1% exposure to international equities (see note 1). This is in strong contrast to the investment portfolios of Australia’s top 10 major retail and superannuation balanced funds, with an investment in international equities of 24% on average.
Cost, access, limited technology, complicated paperwork and a lack of good company research have traditionally presented hurdles for investors seeking to own international shares directly.
The rise of managed portfolios (or SMAs) is enabling direct investment in international assets for all investors, including SMSFs, combined with the added advantage of professional investment management.
Managed portfolio benefits include direct asset ownership, access to dividends, administrative ease, and depending on individual platform capability – tax minimisation via CGT modelling and tax parcel optimisation.
HUB24 Managing Director Andrew Alcock said: “The increased adoption of international managed portfolios is revolutionising the wealth management industry. International managed portfolios remove challenges which have previously impeded investors, providing a new route to overseas markets and sectors, and the opportunities they offer.
“International managed portfolios are empowering both advisers and their clients to access the diversification and growth benefits of international markets. This could result in a sizeable increase in SMSF allocations to overseas equities.”
HUB24 launched a series of international managed portfolios on its platform last year from leading investment managers including Arnhem Investment Management and Southeastern Asset Management. AllianceBernstein Investment Management Australia Limited is set to be the next of a number of international managed portfolios to be added to the platform.
“Platform technology is changing rapidly, and we believe our new international managed portfolio offering can bridge that gap that is hampering local investors, and especially SMSFs, from accessing global markets. It is the nature of our solution and treatment of tax and costs that maximise outcomes for investors, while supporting delivery of these products efficiently for advisers. We see managed portfolios on HUB24 as the marriage of good advice and good practice,” Mr Alcock said.
“International managed portfolios with their direct stock access, professional management and easier underlying administration clearly align to the demands of SMSFs. As such, we believe they will be instrumental to significantly increasing SMSF exposure to international equities in the coming years,” he added.
