Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Retirement

Illiquid assets reduce risk for SMSF portfolios, investors told

By Staff Reporter · May 07 2015
Reading:
egg
egg
egg

Retirement

Illiquid assets reduce risk for SMSF portfolios, investors told

By Staff Reporter
May 07 2015
Reading:
egg
egg
egg

Illiquid assets reduce risk for SMSF portfolios, investors told

author image
By Staff Reporter · May 07 2015
Reading:
egg
egg
egg

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.

“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.

Advertisement
Advertisement

“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
default
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

Join The Nest Egg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

From the web

Recommended by Spike Native Network

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.