Issue 7: Portfolio construction in your SMSF (a little further homework)

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Issue 7: Portfolio construction in your SMSF (a little further homework)

January 2020

Welcome to 2020! I trust that you had a relaxing time over the Christmas and New Year break and that the first part of our ‘homework for the holidays’ was helpful in building an understanding of your SMSF’s asset allocation or in helping construct an investment strategy to set the investment allocations for members within your fund.

The next step is to look at or start to build an understanding of how your SMSF is constructed and we will take a look at what are the building blocks (investment products) that will fill out our asset allocation strategy, and yes this may involve a little more homework.

Portfolio construction is where many start their investment journey; picking investments on the basis of being a ‘good performer’ or on a ‘hot tip’ from a friend or family member. For those who have been reading these instalments over recent months, you may have picked up on a number of themes leading us to this point. We talked about cash flow and liquidity in your SMSF along with growth and income investing and active or passive investment styles and all are important considerations when constructing and managing an SMSF portfolio.

So, let’s take a look at what are the considerations you may take when constructing your SMSF portfolio.

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Ian Irvine – Guest Contributor

Ian has been a keen investor for over 40 years and can draw on his experiences from both investing on his own behalf and also having worked in financial services for more than 30 years. Over this time, he has seen many changes that impact investors’ attitudes to in what and how they invest.

He started his career in what is now referred to as fast moving consumer goods (FMCG) or grocery, working for an Australian margarine manufacturer. In 1986, he was recruited to Westpac around the time of deregulation of the sector, where he spent 10 years before taking a role at AMP and then with ASX for 14 years up to the end of 2017. He continues to be involved with ASX; working on their educational programs.

In 1996, he and his wife established their own SMSF and again the experience and lessons learned regarding managing an SMSF over the years have provided him with many insights and ideas. He enjoys sharing these with others where these are helpful and always suggest that if an investor or SMSF trustee is unsure, that they should seek appropriate advice from a licenced professional.

Ian holds a B. Com (UNSW), and lives in Sydney and enjoys travelling to and meeting investors and SMSF trustee at the educational events with which he has involvement with from time to time.