Under-exposure to global stocks may be missing out: Insync Funds Management

Australian investors including SMSF’s who remain significantly under-exposed to global stocks may be missing out on better value and growth stories not easily available on the ASX.

The big-four banks plus BHP, RIO, News Corp, Telstra, Wesfarmers and Woolworths account for around $900 billion (or a whopping 60%) of the total market.

Diversifying a portfolio beyond Australia can offer a broader range of class-leading businesses.Notably absent from the local stock market is leading global technology stocks, leading global healthcare stocks, global consumer brands or Asian exposed high growth industrial stocks just to name a few.

As we see the transition of Australia from further declines in manufacturing and a greater reliance on commodities the outlook for the local economy gets somewhat more difficult to forecast. We have seen commodity prices adjust as the mining boom slows to more normal levels and the level of supply increases partly due to some of the large mining projects coming on line.

The $A has remained fairly strong even given this as interest rate differentials in Australia has still been attracting overseas investment to chase our yield compared to the very low rates in the northern hemisphere.

With the relatively strong $A still trading above long term averages, this offers local investors the opportunity of gaining exposure to some truly exceptional global companies. If these economic trends continue this window of opportunity could close.

A question that investors should be asking themselves is where growth will come from going forward if the mining sector is not the driver.

Individual companies that are the beneficiaries of innovation or are on the right side of structural change will grow faster than GDP. Other opportunities globally will include powerful forces such as the ageing demographics and the healthcare spend and also the rising consumption of the developing world. This is where the work is done to identify these opportunities in a still relatively low growth environment.

The post Australian Investors could be missing out on potential international returns appeared first on AdviserVoice.

Alex writes his perspective from the position of a multi-asset investment firm that has incorporated some hedge funds and other alternative investments into its diversified portfolio construction since inception in 2002.

——————

There have been attempts over many years to classify alternative investments and hedge funds into defensive and growth categories. Why? Expediency is one reason – the primary purpose was to mirror existing industry terminology used to classify mainstream asset classes like shares and fixed interest.

Additionally some allocators placed hedge fund strategies into specific asset classes based on their return characteristics.  Low risk (or more accurately “standard deviation”) funds were included as “fixed income” and higher standard deviation managers as “equity” irrespective of whether they invested in those asset classes!  This made portfolio construction easier but failed to analyse the true characteristics of these investments – allowing the crazy situation of derivatives funds classified as fixed income.  The problem was that these low or higher standard deviation hedge funds did not exhibit the same characteristics as equity or fixed income in many other ways and they shouldn’t have been sold (or bought) on that basis. It is not unreasonable however, where the advisor is more sophisticated, that long/short equity funds that are exposed to the market can be included in equity allocations as they exhibit the same characteristics based on many measures.

Unsurprisingly confusion remains. Which is why many expert investors and their consultants deal with the categorisation issue through the creation of a separate ‘alternatives’ allocation within a diversified portfolio – mostly made up of hedge funds. The existing asset classes within the portfolio are then proportionately reduced to take into account the inclusion of alternatives.

As discussed in previous articles, accessing alternatives requires specialist expertise. The skills required to realise the full benefits of alternative investments should always include:

• The ability to assess which opportunities are worth exploring further;
• The ability to perform the required due diligence;
• Experience and industry networks;
• The ability to discern which investments are appropriate for clients;
• The ability to access certain structures and offshore domiciled funds.

Alternative investments increase portfolio diversification.  A diversified portfolio which includes assets with different risk and return profiles is difficult to build.  A diversified portfolio helps reduce overall risk without necessarily impacting expected returns. A single manager fund exposes an investor to idiosyncratic risks associated with a single manager, for example key man risk of investing with a ‘name’ portfolio manager.

Alternative investments provide access to specialist investment opportunities.  Some of the best opportunities are normally only available to sophisticated investors including large pension schemes or endowment managers. In turn most of these single managers are only available to wholesale investors.  A diversified portfolio can provide access to these “best of generation” investment managers with high alpha potential.

Using a diversified portfolio materially reduces single manager investment risk. This is essential given the complexities that are involved in understanding and accessing some alternative investments.

Provided an adviser and the client have agreed on the diversification benefits of utilising alternatives, the most important question is sizing; how much should be allocated to alternatives?

Investment views on allocation weightings vary. Typically, a diversified portfolio can hold between 10 per cent and 35 per cent in alternative investments at any one time of which the largest part is likely to be hedge funds.

Hedge Fund Behaviour

Equity Funds

The term “hedge funds” comprises many different types of investment styles.  As hedge funds invest differently (for example some invest in equities others in options) it’s not easy to group their returns as one.   There is significant risk in looking backwards at how alternatives have performed in the past.  Having said that, it is worth noting that during the GFC many hedge funds dropped in value as they were positioned to capture market upside or they were “net long the market”, however prior to the GFC these funds had performed very well.

Many lessons have been learnt from the GFC, in particular improvements in transparency and liquidity – meaning investors can “see through” into certain investments to ensure an understanding of the market risk or “beta” that they are exposed to.  Additionally, the evolution of liquidity means many high quality equity hedge funds can be accessed on a daily basis – particularly those that are regulated in the US or Europe.

As stated above many investors classify long/short equity funds as “equity”, which really means “market risk” or beta.  This allows investors to seek out outperforming funds “alpha” and the pay the premium for this skill.  These are often mult-strategy funds that can invest across the spectrum.

The primary driver of these improvements is founded on allowing investors a clean exit in the event that the underlying investments fail to perform.  For our firm, this means access to these strategies with the additional benefit of low fees.  If equity markets perform poorly and these funds are net long these funds are likely to underperform historic NAV highs – but potentially outperform the index.  In such an instance the enhanced structural aspects mean investors can go to cash quickly.

Market Neutral

Strategies such as market neutral (where the manager is long and short often in equal measures) should also outperform equities. These funds take advantage of small mispricing between similar or related securities and tend to use leverage to exploit small pricing inefficiencies.

Systematic Funds/ CTAs

Other hedge fund strategies such as systematic funds performed well in 2008; during this time our firm had exposure to systematic funds or “CTAs” that performed well.  Many believe these strategies responded well to the volatility in the market.  Evidence this year indicates that CTAs fail to perform in periods where equity markets are range bound and bonds underperform.  Many had not expected that both bonds and equities would underperform at the same time and as such both CTAs and equities tended to underperform.

This adds complexity in considering the role of CTAs in a portfolio with many international investors remaining cautious that CTAs can provide portfolio protection in all circumstances where equity markets are flat or even falling.

Tail Risk Funds

Tail risk is the risk of outsized losses outside of the normal distribution of returns, some funds are structured to take profits from these outsize events (“tail risk funds”).  During the GFC some strategies performed extremely well, for example tail risk funds which profited from volatility in markets.  However, these funds tend to perform relatively poorly in a rising market; one of the tail risk funds held by our firm in 2008 made a triple digit return whilst equity markets collapsed.  Many of these funds are also described as long volatility.  Generally in a falling equities market, long volatility and tail risk strategies perform well.

Diversified Alternatives

As discussed above a diversified portfolio of alternatives reduces reliance on one particular asset class.  It is rare to find an asset that outperforms in any scenario! Some managers can exhibit these characteristics and charge high fees to compensate for this rare skill.  By investing in a diversified portfolio – in theory the fund should perform well versus a cash benchmark (or absolute return investing) – as opposed to benchmarking against the market. The range of hedge fund strategies is balanced with the objective of providing “all-weather” protection for investors.  The allocations can also be rebalanced during the cycle to adjust the allocations to alpha and beta.

There is no guarantee cast iron or otherwise that investments will perform as expected.  We all know that that past performance is not indicative of future returns.  The alternative to looking backwards is looking forwards. Performance based on an expected set of worked events can of course be modelled although this is more of an art than a science as prescience has not been a widely bestowed gift since the days of the Hebrew prophets.

Summary

On the whole alternative investments can bring lower correlation with traditional asset classes. This means that when blended with mainstream investments they can help to smooth out an investor’s portfolio returns over time (particularly taking into account times of market dislocation).

Investing in a single hedge fund requires deep analysis on the investment strategy and how it can perform across a range of market scenarios. Where advisors choose one or two hedge funds there is a risk that those strategies can respond poorly at times when protection is needed. It’s also a big mistake to classify funds as equity or fixed income solely based on their standard deviation as an indicator of risk.  A CTA for example has a considerable departure form traditional asset class thinking and is a million miles from fixed income in many respects.

Many institutional investors deal with this problem by building a diversified portfolio of alternatives assets with a target weighting often in excess of 10 per cent.  They also use specialists to help build the portfolio.

Building a portfolio of alternative investment requires expertise in understanding complex investment strategies and the ability to undertake due diligence including business risk due diligence.

Select Alternatives Portfolio

Note: The accreditation for this CPD article is no longer current. Please visit our CPD section for current CPD quizzes. 

The post Alternative investing – deep dive portfolio construction thinking for financial advisers appeared first on AdviserVoice.

In this paper, Vanguard Australia discusses portfolio construction theory and explain how including exchange traded funds in a concentrated, equally weighted portfolio of shares can reduce total risk (the overall volatility in portfolio returns) and active risk (the volatility of portfolio returns less benchmark or market returns).

Comprehensive examples of these concepts are provided, using historical returns data to illustrate the diversification and cost reduction benefits of investing in exchange traded funds.

To read the paper, click here.

The post ETFs vs. direct share portfolios – the benefits of diversification appeared first on AdviserVoice.

Until some of the poor management behaviour endemic among unlisted property funds is addressed at the individual fund level, the sector will continue to encounter perception problems, according to Jason Huljich, CEO of Centuria Property Funds.

And as a consequence, Mr Huljich warned that both advisers and investors may miss out on the very real benefits that a well managed unlisted property fund has to offer: benefits such as steady returns, low volatility and genuine diversification. This is especially the case in the current environment, when there are strong pockets of genuine opportunity in commercial property, at the same time as limited growth in the equity market to date this year which is causing many investors to look for alternatives.

“It’s quite clear to us, and has been for some time, that as an industry we need listen to investors and put their rights first,” Mr Huljich said.

“There’s a pressing need for solutions to some of the fundamental flaws in the management of unlisted property investments, such as excessive and unfair fees, lack of investor control over even the most blatantly incompetent managers, ‘poison-pill’ provisions and poor governance that has led to a very concerning lack of manager transparency, to name a few.”

To address these issues, Centuria announces the launch of an industry first: a major investor rights initiative that includes four core amendments to management practice for its new funds – and it has called on other fund managers to do the same.

“Our investor rights initiative covers those areas that our own investors told us were the chief causes of concern,” said Mr Huljich.

The Centuria Investor Rights Initiative

1. Investor control over the Responsible Entity

In most funds, under the Corporations Act, the support of 50 per cent of all units held is required to remove the Responsible Entity. This is an onerously high bar that in practice can lead to situations where a patently incompetent incumbent remains. For example, even where 80 per cent or more unit holders who do vote, want to vote the manager out – if this still does not represent 50 per cent of the total unit register, the vote will be unsuccessful. Centuria has reduced the voting level required to remove Centuria Property Funds to 35 per cent of all units, and 50 per cent of units who actually voted.

2. Responsible Entity performance fee structures

Centuria believes that performance or success fees should be designed to align the interests of investors and the Responsible Entity. However, in practice this is a historically grey area in which funds have been able to charge the fee even with very low performance, because the specifications surrounding when such fees will be triggered are less than clear. In Centuria’s case, a performance fee will be charged only after investment costs are recovered AND there is a minimum 10 per cent Internal Rate of Return (IRR) per annum to the investor.

3. ‘Poison pill’ provisions

Many funds have ‘poison pill’ provisions which require the relevant fund to pay the Responsible Entity, even if the Responsible Entity is removed by a vote of investors prior to the end of a fund. Centuria’s funds do not include poison pill provisions, and in its view, no reputable fund should.

“We’ve seen big shifts in the unlisted property sector, with continuing consolidation to the point where there are only three or four large active unlisted fund managers that have survived and are doing well,” Mr Huljich said.

“As a consequence, investors can begin to approach the unlisted property landscape with a higher level of confidence than ever before. Credit providers will not support over-geared acquisitions, nor will they entertain allocation of scarce credit allocations for dubious managers.

“We believe that making changes to address these problems is the next step in the major shake-out the sector is now experiencing. Once practices have been changed to ensure that investor rights are at the centre of the management model, we believe that the sector will be able to deliver investors the full degree of its considerable potential,” said Mr Huljich.

The post Investor rights should come first, says manager appeared first on AdviserVoice.

Australian-owned sector ETF provider, Australian Index Investments (Aii), believes that with the growth in energy costs worldwide that it might be time for investors to tilt their portfolios towards this growth sector. With a basic underlying energy shortage, rising global demand and revolution in the Middle East, triple digit oil prices are very possible.

“With oil prices on the rise maybe now is the time to consider a higher energy stock exposure for portfolios. An easy and cheap way to implement an energy strategy is via the Aii Energy ETF, which is listed on the ASX.

“The Aii Energy ETF contains oil majors such as Woodside Petroleum, Origin Energy, Santos and Oil Search.  The basket of energy stocks in the sector is currently 22. Interestingly, the sector ETF does not just include oil producers but also offers exposure to explorers and service companies supplying the energy industry,” said Annmaree Varelas, CEO, Australian Index Investments.

The post Time to go Overweight on Energy Stocks – Without Having to Pick Winners appeared first on AdviserVoice.

More than a decade later, Lonsec celebrates the model portfolio’s strong track record in providing advisers with a low-cost, direct equity portfolio solution that has historically delivered excellent returns.

The manager of Lonsec’s Portfolio Services division, Jeremy Pree, commented, “Whether it’s been a bull or bear market, the model portfolio has consistently outperformed its benchmark, returning 16.2% per annum since inception [as at 31 January 2011], outperforming the S&P/ASX-
100 Accumulation Index by 7.0% per annum over the past ten years.”

“We think this is worth celebrating since there are few equity model portfolios available today with a comparable track record,” said Pree.

The longevity of Lonsec’s model portfolio can be attributed to its high-conviction approach, which was identified at inception as a successful strategy to deliver alpha.

“Highly concentrated portfolios are increasingly prevalent in today’s marketplace, however, ten years ago there were few direct equity model portfolios with less than 20 stocks,” said Pree.

The success of this model portfolio can also be attributed to Lonsec’s medium-term top-down macroeconomic and sector-theme approach to stock selection and portfolio construction rules, which have resulted in low portfolio turnover, averaging between 20-30% per annum.

“A low-turnover outcome supports the case that direct equity portfolios can provide financial advisers with a low-cost and tax efficient solution,” said Pree.

In September 2010, Lonsec increased the number of stocks in the model portfolio from 12 to 15, making the first significant structural change since inception. The expansion aims to strike a better balance between portfolio risk and potential return.

Pree commented, “The 12-stock Lonsec Core model portfolio has outperformed its benchmark consistently, but we believe the expansion to 15 stocks will help reduce volatility without reducing the strong alpha potential. Feedback from advisers suggests the revised portfolio has broader
investor appeal.”

“The benefit of having a few more stocks is expected to provide greater risk controls to minimise volatility within model portfolios. Volatility is the enemy in this post-GFC world and we feel that enhanced risk management will limit the effects of market volatility.”

The Lonsec Australian Equity Core Model Portfolio is available to financial advisers through Lonsec’s stockbroking and managed discretionary account services, and through partnership with external MDA and SMA platforms BlackRock, OneVue, WealthPortal, UMA Select, Wilson HTM
and more recently, Hub24.

The post Lonsec celebrates a 10 year success story appeared first on AdviserVoice.

The additional stake of £27.3 million brings AMP Capital’s total holding in Thames Water to £144.3 million.

AMP Capital Head of Infrastructure Europe Boe Pahari said the Thames Water asset is well known to the team as it had been managing a stake in the asset since 2006.

“AMP Capital and the European team have extensive experience in the UK regulated environment and has advanced knowledge of the Thames Water asset having been an investor for more than five years,” Mr Pahari said.

“The increased stake in Thames Water aligns with AMP Capital’s strategy of meeting its target return levels and holding core quality infrastructure assets of a critical size that we are able to actively asset manage.

“The additional stake aligns with our strategy to increase value for investors,” he concluded.

Established in 2005, SITE invests in a portfolio of diversified infrastructure assets in the United Kingdom and Western Europe. Total European funds under management held by AMP Capital is £563.2 million.

SITE offers access to a diverse range of infrastructure sectors, including energy/utilities, transport and social infrastructure. The Fund currently holds seven investments: Angel Trains, Alpha Trains, Compañía Logística de Hidrocarburos (CLH), Wales and West Utilities, Kenyeri Hydro, BAA Toggle and Thames Water.

SITE continues to implement its investment strategy and is currently working on a pipeline of attractive opportunities for the benefit of investors.

The post AMP Capital Investors acquires additional stake in Thames Water appeared first on AdviserVoice.

Investing for growth has long been in vogue for Australian investors, and with recent periods of long term growth, it is easy to see why. However, the often overlooked dividend may provide a more consistent source of return that can help investors tailor a portfolio to meet their needs.

While the Australian market is well known for its growth opportunities, it may be surprising to some that it is the old faithful dividend that has driven a significant component of our historical share market
return. As shown below, over the last 10 years dividends represent 4.1% of the total return of the Australian market with a further 1.4% attributed to franking credits.

Dividends – always in season

Any balanced and well diversified portfolio needs an element of growth, but income as a source of return should not be overlooked and left for the bottom drawer.

In high growth periods, we can see that dividends still provide a valuable contribution to the total return of the market. Dividends can play an important complement to the growth component of a portfolio, even in high growth environments.

In negative return periods, dividends can also provide a positive source of return that can minimise the impact of the negative return on the capital component.

Why dividends are so hot right now

However, it is in times of low or slow growth that we see a greater interest in dividend opportunities. As we see increasing indicators that we will continue to have a slow growth environment at least in the short term, dividends can play an important role in getting the most out of your portfolio return.

Furthermore, by comparing the sources of return of the Russell Australia High Dividend Index (below), it demonstrates dividends provide a consistent positive return source that has a much lower volatility compared to the price returns. So while an investor may not require income in itself, income as a source of return may be attractive with its lower volatility over market cycles and greater value of total return in slow growth environments.

Picking designer dividends from cheap imitations

Dividends can be used to give an illustration of the general health of company, including its growth prospects and its predictability and stability of earnings. However, it is important to know how to tell a designer from a cheap imitation.

Dividend yield alone is not a good indication of future income. High dividend yield figures may in fact be a result of extreme falls in price that potentially reflect market concerns regarding the sustainability and stability of a company’s earnings.

For example, Telstra’s recent yield has moved around 10% p.a. If we take an investor who made a $10,000 investment in Telstra 10 years ago, they would now be receiving income of around $370 per year.

We can see from this chart that by chasing yield alone your future income opportunities can be limited if the price is not sustainable.

However, by looking beyond yield alone, a number of other strong and sustainable income opportunities can be identified.

For example, BHP is not synonymous with being a high dividend paying stock. But under the same scenario, our investor would be receiving around $750 in dividends plus franking credits. This is in addition to the capital growth opportunities an investor can benefit from.

Therefore, if an investor looks beyond yield alone, they can benefit from a growing income stream that is delivering a greater dollar value while also maintaining the potential for capital growth over time.

Therefore instead of relying on a simplistic yield metric, there are additional characteristics that can be evaluated when identifying more sustainable dividend opportunities. The Russell Australia HighDividend Index for example, assesses dividend characteristics based on four key criteria:

• Historical dividend yield
• Forward looking dividend yield
• Historical dividend trajectory
• Earnings variability

By assessing multiple characteristics, and over multiple time periods, it provides a more robust way to evaluate dividend opportunities and ensure that future dividend opportunities are sustainable. Instead
of chasing the higher yielding stocks and creating portfolio turnover to do so, the more sustainable dividend opportunities allows you to minimise transactions and also the subsequent taxation
implications.

Franking credits – the perfect portfolio accessory

As after-tax investing grows in fashion, investors are seeking ways to include tax strategies to complement their portfolios. Dividends and their associated franking credits can be an ideal way to give the after tax portfolio return some much sought after enhancement.

By receiving dividends, investors also receive the benefit of franking credits that represent a tax credit that can be used to offset tax liabilities. For low or zero tax paying investors, such as those in pension phase, franking credits can be exchanged for cash through the Australian Taxation Office. In order to quantify this benefit when evaluating income opportunities, the dividends can be grossed-up to ensure the franking credit value is considered.

Therefore, a way to consider franking credits is an alternative source of return in addition to price and income return. To illustrate this, the grossed up total return of the Russell Australia High Dividend Index
can be deconstructed to unique sources of return, demonstrating that franking credits may provide material benefits to a portfolio on an after tax return basis in addition to other return sources.

How you can get the most wear out of your Dividends

By tracking the different capital and income return of the Australian equity market, we can see that as the capital value increases over time, so does the dollar value of the income. This is in contrast to cash, where the capital value and income return does not see growth over the long term.

Source: Shares = S&P/ASX300 Price Index and S&P/ASX300 Accumulation Index, Term Deposit = Reserve Bank of Australia 12 Month Term Deposit Rate (> $10,000)

If an investor does require an income stream to grow over time the growth of capital is also important. To enhance the potential of this growing income, the capital base needs to increase also.

A way to potentially do this is to reallocate some gains from the growth part of the portfolio to the dividend paying component, this will enable an increase in the capital base of the dividend component and further enhance the dividend opportunities. In practice, this may be implemented by re-allocating realised capital gains (eg distributable CGT of an actively managed fund) to a dividend strategy.

Alternatively there are strategies that combine growth and dividend objectives that support this concept.

How you can style your dividend strategy for all seasons

Dividends can play a key role in any investors’ portfolio. Dividends can deliver a more consistent source of return over the long term, while price values may be volatile in short term, but knowing that they will
continue to provide a sustainable component of the total return even in high growth environments. The added benefit of dividends is their associated franking credits and the tax benefits they can bring investors.

There are specific ways that different types of investors may wish to implement and use dividends in their portfolios throughout their investment lifecycle.

Accumulation

• Not all investors want income. However, dividends can provide a sustainable source of positive return that offsets the impact of negative price returns in volatile markets.
• Franking credits used to offset tax liabilities – useful for those with higher marginal tax rates
• Income can be used to offset or reduce expenses in gearing strategies such as margin lending interest.

Transition to Retirement (TTR)

• Income can be used in TTR strategies. Not only does the income provide a way to assist strategies such as salary sacrificing, but also the franking credits can be used to offset tax liabilities.
• By purchasing investment with dividends before retirement, using the income and deferring any sale of capital until the pension phase, capital gains tax implications can be deferred until investors are in a zero-tax environment.

Decumulation

• Use dividends to supplement income and avoid drawing on capital.
• By remaining invested in equities, sustainable dividend opportunities can provide growing income potential with capital growth opportunities.
• Use your franking credits to receive a cash payment from the ATO.

The post Russell Research: Dividends are the new black appeared first on AdviserVoice.

J.P. Morgan today announced it is the only tri-party collateral manager to accept physical gold as collateral to satisfy securities lending and repo obligations with counterparties. This comes as more clients look to use gold as a hedge against inflation and to post as collateral. 

“The ability to finance and leverage the broadest range of asset classes is important to our clients. Many clients are holding gold on their balance sheets as an inflation hedge and are looking to make these assets work for them as collateral,” said John Rivett, Collateral Management Executive, J.P. Morgan Worldwide Securities Services. “By combining our collateral management and vaulting capabilities, we provide clients with greater flexibility in how they mobilise collateral.”

The automated use of gold in collateral management is introduced under J.P. Morgan’s Worldwide Securities Services global collateral engine initiative.  This initiative enables clients to mobilize collateral inventories across multiple geographies and trading activities, regardless of the underlying obligation, to extract maximum value and manage risk.

The firm expects to accept additional precious metals and commodities as collateral later in the year.

J.P. Morgan Worldwide Securities Services Australia is in discussions with clients on how the product might be evolved to suit local investor demand and needs.

The post J.P. Morgan Collateral Management offers automated use of gold appeared first on AdviserVoice.

“We are seeing increased interest from SMSFs, particularly in our two resources ETFs (ASX Codes: MAM and RSR).  SMSF trustees seem to be using our sector resource ETFs to bolster their existing share portfolios,” said Michelle Morgan, Marketing Manager at Aii.

Aii found that the average trade by an SMSF was around $25,000 to invest in its ETFs.

“Quite often SMSF portfolios hold major mining and banking stocks but when seeking to add a tilt towards mining/resources, trustees are caught in a bind between bulking up their BHP and Rio Holdings or using research to find the next star mining stocks.

“Buying a resource sector ETF allows a greater allocation to the sector without needing to sell down existing stocks or add individual mining stocks. This can be done for the cost of a single share trade on ASX and they have piece of mind knowing that their investment fully replicates the underlying index.

“By holding a basket of resource stocks via a resource ETF means that investors naturally increase their exposure to the major players but also pick up smaller miners/explorers who can provide capital growth opportunities over time.  SMSFs can achieve this outcome easily and cost-efficiently, without spending large amounts of time on research and stock selection.

“Mining is hot now but what about when other sectors start to shine? Investors can sell down their mining sector ETFs and buy into a Financials or Industrial ETFs as market sentiment turns to these areas.

“We believe that SMSF trustees are using our sector ETFs to not only get an overweight position is a sector but also make new investments without touching their core share portfolios that would trigger CGT events,” said Ms Morgan.

The post Resource Sector ETFs popular with SMSF Trustees appeared first on AdviserVoice.