Concentrate on the World Changers
An SMSF offers investors the ability to increase their exposure to the most promising companies in the market.
Traditional, industry run superfunds serve a purpose and work for a proportion of Australian investors. That being said, investment options are limited. Members typically get an option to allocate between Australian and foreign stocks, debt and real estate. This combination is proven to be successful in the long run, but self-directed investors lack the control they may desire. There is no ability to select specific stocks or sectors to include or leave out of your portfolio.
The Association of Superannuation Funds of Australia (ASFA) found that 23% of all super inflows are invested into ASX listed stocks. This largely means buying the ASX-200 index.
What does “buying the index” look like for Aussie investors? The ASX200 is an index of Australia’s 200 biggest stocks and has returned 52.6% since the start of 2010. Investors are pouring their money into banks and mining companies- both laggards compared to the market’s best performing sectors over the last decade. Financials and materials account for 48.3% of the ASX200’s performance. With major index leaders Commonwealth Bank up just 30% in the last 5 years, NAB down 2% and Westpac down -20%, it’s easy to see why the index is being held back.
The US is the centre of global innovation and capital. The world-changing companies of tomorrow are accessible on the US market today and have posted incredible returns.
When looking at the major US indexes, the Nasdaq 100 (tech-focused) is up 700% since 2010 and the S&P 500 is up 292%. While traditional funds do offer exposure to the US market, investors may not get the concentration they desire.
For example, look at the electric vehicle space. While Tesla is the obvious market darling, options like Nio from China provide global exposure to the sector accessible through the US market. Both of these stocks are up several hundred percent in the last few years. Most regular super funds would have very limited exposure to these stocks if any.
An SMSF allows for increased exposure to such sectors as well as others like renewables or e-commerce or FinTech, all of which are playing an increasingly important role in our economy. Overseas companies changing the game in their local markets also choose to list in the US with companies such as Alibaba, Mercado Libre (the Amazon of Latin America) and Atlassian all tapping the US for growth. The US market is home to companies from nearly 50 other countries; it’s not only the place the world trades, but it’s the place globally-minded companies choose to seek growth capital.
To be clear, this isn’t a US vs ASX debate. Promising companies exist on the Australian market but the index alone may disappoint some investors. In the coming months, Stake will offer ASX trading to all SMSF members. The ability to select specifically which companies you invest in will be available in both the US and local markets.
Want exposure to specific themes in your super? Consider an SMSF.
At $770 per year for Beta customers, Stake Super is unbelievably affordable compared to the $3,900 average fee SMSFs pay. Best of all, this discount applies for the life of the SMSF, and the first year’s fee is included when you set up with Stake Super.
Rather than cutting service or pushing the admin work back to you, we take care of the tax and audit work for you. Let us do all the heavy lifting so you can focus on investing and managing your portfolio.
At Stake, we’re focused on giving you a better investing experience but we don’t take into account your personal objectives, circumstances or financial needs. Any advice is of a general nature only.
Please be aware that when investing, all your capital is at risk. As investments carry risk, before making any investment decision, please consider if it’s right for you and seek appropriate taxation and legal advice. Please view our Financial Services Guide before deciding to use or invest on Stake.