How Australian investors can access investments outside traditional asset classes
One of the benefits of running your own self managed super fund (SMSF) is that there’s no such thing as a one-size-fits-all investment strategy. Because you are managing your own fund, you can tailor your strategy to suit your personal situation and goals.
But while you may have turned to an SMSF to have more control over your investment strategy, you may not have the knowledge or expertise to diversify your portfolio beyond traditional assets such as cash, Australian shares or fixed interest investments. This means you may not be making the most of everything an SMSF structure has to offer.
Investments outside of traditional asset classes can have an important role to play in diversifying your portfolio. Diversification may help to manage your portfolio and income in relation to market fluctuations, especially as you move closer to retirement. Because these assets behave differently, they may provide opportunities to smooth out volatility and potentially enhance returns. Some examples of such assets to consider under advice may include private investments, commercial real estate, infrastructure or overseas investments. Some of the downsides to these types of investments, however, is that they may be difficult for everyday investors to manage without the requisite level of knowledge.
Have you ever considered investing in any of the following asset classes?
There is growing widespread community and political support for carbon reduction initiatives that is contributing to the expansion of renewable energy technologies such as large-scale solar power plants. These are typically stable, cost-competitive, cash-flow producing solar power stations that generate emissions-free power.
Where’s a potential investment opportunity? The award-winning New Energy Solar fund, for example, allows Australian retail investors to invest in a fund with a growing portfolio of solar plants in different locations across the US.
Innovations such as cloud software, smartphones and artificial intelligence continue to challenge existing industries, forcing them to evolve, but presenting opportunities for investors to access new markets.
Where’s a potential investment opportunity? The Evans & Partners Global Disruption Fund, for example, allows Australian retail investors to invest in companies that have a proven ability to disrupt existing industries and markets, and a selection of smaller innovators who have the potential to do the same.
Overseas residential real estate
While the Australian residential property market may not always be the most stable option, it’s still possible to find viable investment opportunities in overseas residential property markets.
Where’s a potential investment opportunity? The US Masters Residential Property Fund, for example, is the largest Australian-listed property trust providing retail investors exposure to US residential property. The fund invests in freestanding and multi-tenant US residential property in the New York metropolitan area and seeks to achieve returns through rental return and capital growth.
What you should consider
- For diversification, don’t just consider local investment opportunities – think globally and look to overseas industries or markets which may be performing better than local ones.
- It’s not easy for individual Australians to access some investments – for example, US property or solar farms. But you can access these assets through vehicles such as unit trusts listed on the ASX.
- If you’re keen to take control of your investment strategy and tailor your investments more closely to your personal preferences, circumstances or goals, then you may wish to consider if an SMSF is right for you.
- Not all investments are right for everyone. Always seek advice from an expert before making changes to your investment strategy.
- Like all investments, these types of investments carry risks that may result in the loss of income or principal invested. In addition to the general risks of investing, specific risks associated with investing outside of traditional asset classes may include, but are not limited to, regulatory risk, interest rate risk, currency risk, gearing risk, counterparty risk and fund liquidity.
Want to know more?
At Dixon Advisory, our clients are guided by an Investment Committee with decades of combined experience in investing, finance and superannuation. We take pride in moving quickly to bring new opportunities to clients to invest and diversify, and we only advise on the services that we believe in and recommend to our employees, families and friends. Importantly, we are committed to educating our SMSF clients so that they are equipped with the knowledge and confidence to make the right investment decisions for themselves.
If you’d like to explore the opportunities and services Dixon Advisory has to offer you in an obligation-free consult*, then contact us today so we can organise a time for you to talk to one of our experts.
*The information provided will be factual information or general advice and suitable for individuals or families with combined retirement assets of more than $300,000. It has been prepared without taking into account your personal objectives, financial situations or needs. Fees and charges may apply to any services or advice provided following any initial free consultation.
This article may contain general financial advice and was prepared without taking into account your objectives, financial situation or needs. Before acting on any advice, you should consider whether the advice is appropriate to you. Seeking professional personal advice is always highly recommended. Any forward-looking statements are based on current expectations at the time of writing. No assurance can be given that such expectations will prove to be correct.
Walsh & Company Investments Limited (ACN 152 367 649) (AFSL 410 433), as the responsible entity for the New Energy Solar Fund (ARSN 609 154 298) (Trust), and New Energy Solar Limited (ACN 606 396 983) (Company) offer Stapled Securities and Options in the Trust and the Company. URF Investment Management Pty Limited (ABN 21 600 188 805) (URF IM), a corporate authorised representative (CAR No. 1009350) of Walsh AM, is the Investment Manager of US Masters Residential Property Fund (URF). New Energy Solar Manager Pty Limited (ABN 57 609 166 645) (NES Manager), a corporate authorised representative (CAR No. 1237667) of Walsh AM, is the Investment Manager of New Energy Solar Fund (NEW). Evans and Partners Investment Management Pty Limited (ACN 619 080 045, CAR No. 1255264) (EPIM) is the Investment Manager of Evans & Partners Global Disruption Fund (EGD). Walsh & Company Investments Limited (ABN 78 152 367 649, AFSL 410433) (Walsh Investments) is the Responsible Entity of the URF, NEW and EGD. Dixon Advisory & Superannuation Services Limited (ABN 54 103 071 665, AFSL 231143), Walsh Investments, NES Manager, URF, URF IM, and EPIM are wholly or partly owned subsidiaries (directly or indirectly) of Evans Dixon Limited (ABN 54 609 913 457). Investors should obtain a copy of the relevant product disclosure statement from the fund website before deciding whether to acquire securities in URF, NEW or EGD.