SMSF trustees warned against “self-defeating short-termism” as billion-dollar losses forecast for this year

The chief executive of the SMSF Association Andrea Slattery has sought to warn trustees of self-managed super funds about the importance of avoiding “short-termism” following research that suggests the sector is set to suffer some of its biggest losses since 2011.

Slattery’s comments come after June quarter research released by leading financial services company Credit Suisse claimed SMSFs lost almost $19 billion in Aussie equity positions and predictions of a further $21 billion in losses for the September quarter.

In a statement accompanying the report, Credit Suisse strategist Hasan Tevfik said he estimates Australian SMSFs, or “selfies”, had lost about 7% in Australian equity positions the past six months.

“The last time SMSFs haemorrhaged so much capital on their Aussie equities positions is during the euro crisis back in 2011,” he said.

But Slattery told SmartCompany this morning she believes the research fails to take into account SMSFs have “a long-term investment horizon”.

“Not a three months or six month cycle, it’s self-defeating to look at it this way,” she says.

“SMSFs understand volatility; it is part and parcel of the investment game.”

Slattery says the discussion around losses in the quarters in question doesn’t “truly reflect history”.

“In poorer times, tougher times, SMSFs do much better than other superannuation sectors and in good times do a little bit worse,” she says.

 “If you’ve got good professional advice and good understanding of investment allocations, it’s just a part of investment cycle.

“These are the times you should be seeking specialist advice to confirm your position and ways to look at personal and factual circumstances of your fund.

 “People must avoid at all costs short-termism when it comes to markets and how it reacts when you’re in a long term investment savings vehicle.

“We believe short-termism must be avoided at all costs.”

Slattery says SMSF trustees include small business owners who are used to making “tough decisions” and she urges SMSFs to seek accredited specialist advice.

“They’re used to getting professional advice directly,” she says.

“It’s very important people getting good specialist advice for their SMSFs.”

But Tevfik told SmartCompany he doesn’t think the research reflects short-termism “at all”.

He says Credit Suisse believes SMSF trustees will “soldier on” with their Aussie equity positions because, first and foremost, they are not “your typical retail investor”.

“They seem more sophisticated and were happy buyers of Aussie equities after the huge losses during the global financial crisis in 2008-09,” he says.

“Similarly, they continued to buy equities after the losses endured during the euro crisis.

“Second, income seeking investors like the 1.05 million selfies have little option, outside of Aussie equities, when searching for yield.”