Super Funds – Compare the Pear, not the Apples!
Australia’s Industry Super Funds have been running the highly effective ‘compare the pair’ campaign for many years. However, Zenith (a leading research consulting firm) argue in a recent paper that ‘this comparison is not straightforward and is often misleading’. Zenith’s research focus on what constitutes a ‘Balanced’ Super Fund portfolio. They argue that most people’s definition of ‘balanced’ is something like a 60/40 mix of Growth and Defensive assets. However, the so-called Balanced Option of Industry Super Fund, Host Plus, contains a staggering 93% exposure to Growth assets (largely equities, property and infrastructure). The largest Industry Super Fund, Australian Super, has 79% growth assets in its Balanced option. This means that in rising markets, they are likely to outperform, but may leave investors highly exposed in falling markets. Zenith conclude by urging investors to look under the hood and compare pears with pears, not apples!
Barring last minute falls, global equity markets will end September some 2-3% higher, despite a cacophony of negative noise. The sharp sell-off in July has now been entirely reversed. Stanford Brown’s client portfolios remain slightly overweight global equities – a position we have held since April.
In Britain, the Supreme Court ruled that the Queen herself may have been led to act unlawfully when Prime Minister, Boris Johnson, recently advised her to suspend Parliament. The official Brexit Date remains October 31st….will this ever end? Earlier in the week, President Trump delivered a stinging rebuke to China’s trade practices at the United Nations saying that the country had repeatedly failed to keep its promises made when China joined the World Trade Organisation in 2001.
Back in Australia, RBA boss Philip Lowe stated this week that monetary policy (interest rates) had become less effective as a tool to raise economic growth but that he still expected house prices to rise. Markets are fairly certain that the RBA will cut rated by 0.25% to 0.75% on October 1st. Expect some form of quantitative easing (QE) to arrive at our shores next year as growth and inflation are currently missing in action.
Preparing for Life After Full Time Work
“Leisure is a beautiful garment for a day, but it will not do for constant wear.”
Bishop Fulton Sheen (1895)
Stanford Brown specialises in working with our clients to prepare them for Life After Full Time Work. This can often be a challenging and confronting time. Harvard professor, Teresa Amabile, interviewed 120 executives to find out about their retirement plans and her findings are detailed here. As we well know, retirement planning goes well beyond saving money and maintaining physical health. How will you find purpose in life after a busy schedule of career and raising children?
Click here to read Stanford Brown’s ‘Ten Golden Rules of Retirement’.