Industry fund Hostplus is making peace with the self-managed superannuation fund sector by allowing SMSF investors to buy into some of its more popular investment options.
The move represents a coming-together of the two largest parts of the superannuation sector at a time when industry funds are set to overtake SMSFs to be the largest single sector by 2020.
SMSFs grew dramatically until the middle of the decade, as large investors tipped excess cash into their private funds. However, this slowed dramatically following Turnbull government moves restricting tax-free funds to $1.6 million and hitting the industry with $1.5 billion in new taxes.
In the 15 months to the end of March, the SMSF sector had $746 billion under management compared with $677 billion for industry funds. However, SMSFs are growing more slowly, having increased funds under management by only 2.4 per cent in the last 15 months compared with 13.2 per cent for industry funds.
The Hostplus plan will see the group offering SMSF investors access to six of its 23 investment options; its flagship balanced option, its low-cost indexed balanced option and high-performing unlisted options run by the IFM umbrella group – Australian Infrastructure, Industry Super Property Trust, Australian Property – along with diversified infrastructure and Property options.
Hostplus’ group executive, Member Experience, Paul Watson said Hostplus had initially piloted a plan last year and now has scores of SMSF investors investing some of their assets with Hostplus.
“These early investors have been particularly complementary of our on-boarding and initial investment registration solution, which is entirely digital and more frictionless than completing paper-based application forms and the like”, Mr Watson said.
Hostplus’ chief executive, David Elia, said that Hostplus’ Self-Managed Invest (SMI) options have been specifically designed to offer a simple and flexible investment solution for SMSF investors, seeking to invest alongside a major APRA-regulated fund to access distinctive assets ordinarily unavailable to retail investors.
“We are excited and pleased to formally announce and launch this innovative investment opportunity for SMSFs that we believe will allow them to benefit from a best of both worlds approach to investment for their retirement.
“Put simply, Hostplus’ SMI options enables SMSFs investors to pool their funds with ours, as unitholders in some of our most popular and well-performed investment options, through our Pooled Superannuation Fund (PST) structure.
SMSF’s have been dogged by underperformance with many reports saying only the larger ones, worth $2 million or more, performed as well as industry funds. In a recent report, the Productivity Commission said: “Large SMSFs earn broadly similar net returns to APRA-regulated funds, but smaller ones (with less than $500,000 in assets) perform significantly worse on average.”
Hospitality sector based Hostplus has been a top performer in recent years and has $40 billion under management.
The New Daily is owned by Industry Super Holdings