Top super fund launches investment option for worn-out SMSF owners

Hostplus announced it would be welcoming DIY super fund owners to access six of its 23 "innovative and compelling" investment options. Source: Getty.

One of Australia’s best-performing superannuation funds has launched what it says is a first for the super sector – a way for self-managed super fund owners to invest alongside its own fund managers.

Hostplus, which topped the performance table of all Australian super funds in the last financial year, as well as coming out best in the three, five, seven and 15-year performance tables, says it will allow DIY super fund owners to access six of its 23 “innovative and compelling” investment options.

The industry fund – which caters to hospitality industry workers but can be joined by anyone – is opening up its flagship Balanced option and its low-cost Indexed Balanced option, as well as several funds that invest in the infrastructure and property sectors.

SMSF owners will be required to invest minimum of $10,000 in one of the six ‘Self-Managed Invest’ (SMI) options, but they won’t have to become members of Hostplus itself. Instead, their funds will purchase units in the Hostplus funds.

Hostplus CEO David Elia says the plan was to offer a simple and flexible investment solution for SMSF investors who want to get their hands on assets which are ordinarily unavailable to retail investors.

“We believe this is an Australian first and is an innovative and practical demonstration of how two of Australia’s largest superannuation and pension sectors can work together for the mutual benefit of DIY investors and our fund members alike,” he says.

Hostplus been a favourite of Barefoot Investor Scott Pape, who cites its low fees and strong performance as reasons to join. The new product launch comes as an increasing number of SMSF owners complain about the rising cost and regulatory burden of managing their own funds – as well as reduced incentives for doing so.

Currently SMSFs hold 30 per cent of the country’s super assets and, according to the ATO, there are almost 600,000 SMSFs with more than 1.1 million members.

But the allure of an SMSF appears to be declining. The number of SMSFs being wound up jumped by more than 50 percent in the year to June 2018, according to The New Daily, while the number of new SMSFs being opened dropped 17 percent.

Changes made by the Turnbull government in 2017 capping the amount of tax-free income that could be paid from an SMSF made owning a fund less attractive for wealthy Australians. Falling property markets – SMSFs are commonly used to invest in property – are likely to have seen the decline recorded in the 2018 financial year continue into the current year.

Do you manage a self-managed super fund? Do you think this is a good idea?

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