Non-traditional assets are regularly overlooked by advisers and SMSF trustees due to illiquidity and accessibility concerns. There’s a good reason to take a second look.
Diversity is key for our self-managed super fund (SMSF) clients – from both a risk and a reward perspective. But what should that look like in practice?
The case for investing in non-traditional asset classes – locally and overseas – is growing stronger thanks to the global rise in inflation, continuing low yields and on going volatility in listed equity and fixed income.
The benefits of non-traditional assets
When we talk about non-traditional asset classes, we’re referring to those assets that sit outside your regular equity, fixed income and cash. Typically used by institutional investors, they have a low correlation to the share market and are often privately owned and highly illiquid. Some, such as hedge funds, operate in the public markets but employ less conventional tools like short-selling and leverage.
Non-traditional assets fall into many categories, but some of the more common ones are:
- private equity
- venture capital
- commercial property
- hedge funds.
It’s not just their low correlation with traditional markets that makes them attractive. Many of these assets offer long-term attributes that better reflect the investment goals of many SMSFs. They also tend to be high on the risk spectrum, providing opportunity for enhanced returns and, in some cases, high income. Real estate and infrastructure assets can also act as a hedge against inflation, as the underlying contracts for income are often linked to rising prices.
A whole new investment world
So why do advisers tend to overlook these non-traditional assets?
Illiquidity, and the perception that they’re notoriously difficult to access, play a big part.
However, Hostplus has created Self-Managed Invest (SMI), an award-winning SMSF offering1 which overcomes both these issues, to provide access to non-traditional assets while maintaining liquidity.
Hostplus SMI can provide your clients with access to an array of listed and unlisted investments, which can include:
- unlisted Australian and global infrastructure
- institutional-grade domestic and international property
- commercial and industrial sectors
- private equity investments.
Hostplus SMI presents a great opportunity for advisers and clients. It allows you to build a portfolio of investments with long-term investment strategies, that provide little to no correlation with the share market.
At the same time, access and liquidity are possible due to the SMI options investing through Hostplus’ Pooled Superannuation Trust structure. This means your clients benefit from their money being pooled with more than one million Hostplus members, while maintaining their own units within their chosen investment option.
Not only will your clients have access to unique assets, but you and your clients will benefit from the online functionality to apply for and manage the investments including the ability to switch options and request withdrawals, as well as having access to meaningful reports and ongoing support.
Knowing your clients
As your clients' adviser, you have the understanding and knowledge to consider the investment options that best suit your clients.
Hostplus SMI provides a diversified range of pre-mixed and sector-specific options, including:
- Hostplus Balanced
- Hostplus Index Balanced
- Hostplus Property
- Hostplus Infrastructure
- Hostplus Australian Shares - Indexed
- Hostplus Diversified Fixed Interest - Indexed
- Hostplus International Shares - Emerging Markets.
Our team can help you understand the attributes of each option so that you can incorporate assets that complement your clients’ existing portfolios, while taking into account their risk appetites and financial goals.
The key to success
Ultimately, by tapping into the accessibility, flexibility and liquidity of Hostplus SMI – and taking the time to understand your SMSF clients’ needs and goals – you can help them build a strong and diversified investment portfolio that aims to set them up for future success.
To find out more about how Hostplus SMI can help you and your clients, contact us on 1300 350 819. Our insights and resources can help you make confident decisions for your clients – their fund, their future and their finances.
1 The Canstar 2020 Innovation Excellence Award. Awards and ratings are only one factor to be taken into account when choosing a super fund.
This information contains general advice only and does not take into account your personal objectives, financial situation or needs. You should consider if this information is appropriate for you in light of your circumstances before acting on it. Past performance is not a reliable indicator of future performance and should never be the sole factor considered when selecting a superannuation fund.
Please read the Hostplus Self-Managed Invest (SMI) Product Disclosure Statement (PDS), available at smi.hostplus.com.au before making a decision about Hostplus SMI. For a description of the target market, please read the Target Market Determination (TMD), available at hostplus.com.au.
Hostplus Self-Managed Invest (SMI) is issued by Host-Plus Pty Limited ABN 79 008 634 704, AFSL 244392 as trustee for the Hostplus Pooled Superannuation Trust (PST) ABN 13 140 019 340.
The information in this article is correct as at the time of publication.