Powered by MOMENTUM MEDIA
subscribe to our newsletter sign up

Illiquid assets reduce risk for SMSF portfolios, investors told

Holding illiquid property assets within an SMSF can reduce risk since investors will not sell irrationally when markets turn, according to property group Charter Hall.

 

Speaking at a media event in Sydney, head of Charter Hall direct property Richard Stacker said having a proportion of an SMSF locked up in an unlisted property fund is likely to generate higher yields and restrain trustees from pulling their money out at the wrong time.

Advertisement
Advertisement

“If [trustees] can get their money anytime they like or when the market turns quickly, often that’s just increasing their risk if they jump at the wrong time,” he said.

Mr Stacker argued that while an SMSF trustee in the pension phase may require greater liquidity than someone in the accumulation phase, a 10 per cent allocation in an illiquid asset would still be easy to manage.

“A 10 per cent allocation with yields of seven and a half per cent is still very attractive, we think,” he said.

The SMSF Association's director of technical and professional standards, Graeme Colley, agreed and added that a diversification of assets in the fund would sort out cash flow issues anyway.

“If there are only a small proportion of assets locked up, it’s really not subjecting the fund to that much greater risk,” he said. 

Illiquid assets reduce risk for SMSF portfolios, investors told
nestegg logo
subscribe to our newsletter sign up
FROM THE WEB
Recommended by Spike Native Network
DavidL - Why has it been used in high rise construction if it has never been approved for that purpose? How does it get past building inspectors in the first place?....
Mort - This is absolute nonsense from the shadow treasurer, who should know better. Why has Labor excluded non tax paying Commonwealth pensioners, if not for.......
Howard Patterson - It is not a matter of banning the product, it may be perfectly safe on a low rise building. When all the humbug is stripped away, the fact is that.......
Jim - The gravy train is about to be stopped, thumps up. ....