Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 272

Cuffelinks Newsletter Edition 272

  •   21 September 2018
  •      
  •   

Among the investors who suffered most from the GFC are those scarred by the experience who moved into cash and term deposits for the last decade. Their income has fallen dramatically. Meanwhile, investors who stayed in a balanced portfolio, with an asset allocation like the one below, have seen investment returns in 10 years of over 80%, despite the initial ravages in 2008.

Research by Vanguard on 580 Australian balanced funds shows asset allocation is responsible for 90% of a diversified portfolio's return, leaving only 10% for factors such as stock selection. Yet many investors spend most of their time selecting shares or fund managers.

 

Asset allocation of superannuation funds excluding SMSFs


Source: Association of Superannuation Funds of Australia (ASFA).


This institutional portfolio mix differs from most SMSFs due to its larger allocation to global equities, unlisted assets and hedge funds. However, Marcus Evans shows SMSFs are increasingly diversified, and global equities are popular for new flows. 

This week, five insightful stories on investing: Roger Montgomery believes many so-called innovative and disruptive companies, including Afterpay and Tesla, are simply a tweak on an existing business modelSteve Johnson offers an honest mea cupla on his poor call buying Freedom Insurance, which fell foul of the Royal Commission last week; Erik Weisman explains what we can really interpret from the shape of the yield curve, which is worrying many investors; and Rudi Filapek-Vandyck gives his final summary of the latest ASX reportingseason. Back on the GFC, Brett Lewthwaite shares his personal view of watching the CDO market go crazy 10 years ago.

Continuing our debate on Labor's franking policy, Warren Bird responds to the readers who argue that SMSFs in pension mode should not have a zero tax rate. In fact, they've already paid tax. Yesterday, Treasurer Josh Frydenberg asked the Standing Committee on Economics to inquire about the implications of removing franking credits, and submissions can be made here.

Another Royal Commission, now into the aged care sector, hit the market this week, with Aveo, Japara, Regis and Estia all suffering heavy falls. The mortgage broking hearings were bad, superannuation was worse and insurance was shocking, but aged care will be the worst.

This week's White Paper from Accurium/Challenger is a subject often overlooked by SMSF trustees in managing the capital gains which form part of their assessable income each year.


Graham Hand, Managing Editor

For a PDF version of this week’s newsletter articles, click here.

 

  •   21 September 2018
  •      
  •   

 

Leave a Comment:

banner

Most viewed in recent weeks

Why spending more in early retirement can improve lifetime income

Conventional wisdom encourages retirees to preserve superannuation. But if those likely to qualify for the Age Pension later in life spend a little more today, it may deliver higher lifetime income and a more stable retirement.

Testamentary trusts have secured the CGT exemption

Treasury’s latest CGT reform draft delivers a win for testamentary trusts and deceased estates, exempting estate-derived gains from the 30% floor. However, questions on death and divorce rollovers remain unresolved.

Meg on SMSFs: What do we think about reversionary pensions these days?

Reversionary pensions have long been a staple of SMSF estate planning, but are they still the best option? Meg Heffron revisits a once-clear favourite and asks whether changing super rules have shifted the balance.

Is it time to bail on Australian stocks?

For generations, Australian investors have backed banks, miners and dividends. But has that loyalty come at a cost? A look at the numbers raises an uncomfortable question about where future returns will come from.

How does the 4% rule stack up?

The 4% rule has long been retirement's gold standard. But after a difficult period for investors, fresh analysis suggests a more conservative approach may significantly improve the chances of making savings last.

Testamentary trusts survived the trust tax. The drafting battle has just begun.

The fight over testamentary trusts looked settled. Then the draft legislation arrived. Hidden in a technical detail is a question that could force many families to rethink wills they thought were already future-proof.

Latest Updates

Planning

How the typical Australian Family could save $844,350 in taxes

The value of a testamentary trust is not determined by wealth alone. Depending on circumstances, it can reduce the tax burden on inherited income, create efficiencies and help build intergenerational wealth.

Superannuation

There's a reason why your super is locked up until your 60s

For decades, it seemed settled. Then one controversial idea reignited a debate that could reshape the financial future of millions. The real question isn’t who’s right or wrong, but whether a long-held assumption deserves another look.

Property

The housing slide could become a crash

House prices are sliding across Australia, yet the most dangerous ingredient for a housing crash is still missing. If job losses surge amid growing economic risks, today's correction could become a historic property downturn.

Retirement

Under-retiring: The greatest retirement risk in a generation

Two retirees. Similar savings. Completely different lives. New research from Challenger reveals why some Australians confidently spend in retirement while others hold back and the overlooked factor shaping retirement decisions.

Five risks to watch in markets

Things you may often hear are: a recession is around the corner, markets are overpriced, the AI sector is about to flop at any moment. It’s like the never-ending laundry pile that sits in my house, it never really disappears.

Investment strategies

Do you qualify as ‘rich’?

What does it mean to be 'rich'? For something so universally desired, it is surprisingly difficult to define. That ambiguity creates a challenge for investors and raises a bigger question about what financial success really looks like.

Investment strategies

If you’re worried about your bond portfolio, you’re missing the point

Most investors think they know what bonds are for. But when markets turn volatile, a surprising misunderstanding can lead to costly decisions. Here’s the overlooked lesson that could change how you view your portfolio.

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.