Smart Investing
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The Chinese calendar says this is the year of the dragon. Less auspicious perhaps but for Australian investors this is shaping up as the year of fixed income.
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By taking a few simple steps, super fund members can both boost their retirement savings and legally minimise tax on their super – for themselves and their beneficiaries.
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Self-managed super funds seem set to remain by far the preferred superannuation choice among higher-balance members – particularly those in retirement.
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This is a question that many investors are, not surprisingly, asking themselves. But what might surprise some investors is that the answer is not as elusive as it may at first seem.
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Changes to the ASX operating rules to allow fixed income Exchange Traded Funds (ETFs) to trade on the Australian market will open a new means for investors to efficiently, conveniently and inexpensively diversify their investment portfolios.
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News & Commentary
Wanted: local research on ETFs 04 Mar 10
Despite the rapid growth of Exchange Traded Funds (ETFs) in Australia, there is a dearth of independent research on locally listed funds.
Australian-located booksellers are increasingly offering a large range of books on ETFs – but from overseas authors.
Fortunately in the next couple of months, managed fund researcher Morningstar Australia will begin to publish research specifically on the Australian ETF market.
One of the key drivers for Morningstar''s imminent move is the demand for research on locally-listed products from individual investors, SMSFs and financial planners.
Indeed, a large percentage of financial planners who responded to a survey last year by investment researcher Investment Trends had pointed to a lack of information about ETFs.
This as-yet-unsatisfied demand to know more about ETFs from a local perspective is an almost inevitable symptom of their tremendous growth on the Australian market. Just consider that the market capitalisation of ETFs listed here rose 151% t $3.077 billion in the 12 months to February 26, reports the ASX''s monthly update on listed funds.
It seems that advisers who gain more expertise about ETFs will be meeting a pent-up demand from their clients and potential clients.
And the thirst for ETF information among advisers is likely to accelerate as more turn to a fee-for-service model. In short, providers of ETFs do not pay commissions.
The task for investors and advisers wanting to come to terms with ETFs is much more straightforward than with many other investment products because of their sheer simplicity.
In the simplest terms, ETFs are index-tracking investment funds that are traded on the sharemarket. The low-cost and ease of use of ETFs makes them an ideal way for investors to gain wide local and international diversity for their equity portfolios.
For instance, a single transaction can give an investor immediate exposure to the S&P/ASX300.
The ASX and ETF investment managers already provide generic information about the use of ETFs. And, of course, investment managers provide much detail about their own products.
It is crucial to understand any investment before outlaying your money. That is one of the fundamentals of sound investment practice.
