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New ways to manage your super

INVESTORS with a self-managed super fund have been presented with some new alternatives that aim to retain the benefits of a do-it-yourself approach but without the hassles.

People with DIY super funds are often motivated by a desire for direct control over their own money. They also are attracted to the flexibility that comes with a DIY fund.

Offsetting these benefits are several negatives. Individuals have to spend substantial time administering the fund and managing their investments, or else pay someone else to help them.

Similarly, they must take on the legal responsibility of being trustee of their own fund, or else pay someone else, like a trustee company, to take that role.

Over the past decade, many investors have decided that master trusts offer a better alternative.

There are 99 master trusts in Australia with total funds of $84 billion, according to Rainmaker Information. Of this total, about 80 per cent is for superannuation.

The key attractions of master trusts include:

p access to a range of investment options;

p flexibility to switch between the different options; and

p centralised administration and reporting of all investments.

The degree of choice is highly varied. Some fund managers offer master trusts that restrict investment choice to their own funds. However, most master trusts, such as Asgard and Summit, offer access to several fund managers. Rainmaker found that the average master trust offers 29 investment options through 12 different fund managers.

Several new and improved master trusts, only available through financial advisers, have lifted the stakes by offering a much wider range of investments.

Macquarie Portfolio Service’s Super Manager offers access to more than 160 wholesale managed funds, including hedge funds, and all ASX-listed securities (except options and warrants).

BT Portfolio Service’s SuperWrap also offers access to about 160 wholesale managed funds and approximately 80 ASX-listed securities.

Norwich Union Navigator’s Personal Retirement Plan offers more than 100 managed funds as well as ASX-listed shares. These services also are available in rebranded versions. For instance, the Synergy SuperWrap, offered by West Perth financial advisory group Gannon Growden Schonell (GGS), is derived from the BT product.

Ben Devenish at GGS says investors find control over investment decisions to be a strong attraction to self-managed funds, however many can be unaware of the administration and trustee responsibilities.

The Superwrap model can enable them to get both objectives satisfied – investment control and professional compliance, with or without financial planner involvement.

Macquarie’s Neil Roderick claimed the recently launched Super Manager “was the first time that a realistic and considerably cheaper alternative to any DIY super solution has been made available to financial advisers and their clients”.

Macquarie has established guidelines on some securities holdings to ensure investment portfolios contain an “acceptable level of risk”.

For instance, individual stocks within the ASX100 can comprise no more than 20 per cent of the total portfolio, while stocks within the ASX101-200 can comprise no more than 10 per cent of the portfolio.

Other features of this product are the online transacting and reporting.

Advisers can switch investment options via the Internet while advisers and their clients can view details of their portfolio transactions via the Internet.

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