5 November 2012

Much has been written of late about what many financial pundits are calling the “new normal” by which they mean we are now in a period where the investment markets will track more sideways than upwards and hence income is more prominent that growth. This has, amongst other things, lead to a renewed interest in the bond markets as a more reliable source of income. Many investors are revisiting their portfolio construction to provide a more normalised balance between equities and fixed interest (Australian investors have typically been over-invested in equities relative to their counterparts in the USA and Europe.)

This renewed interest in income inevitably brings a focus onto fees – and rightly so. This is one area where investors should be more actively involved. In a pertinent article in today’s Australian, Adam Creighton notes that many investors are “unwittingly (and probably foolishly) paying exorbitant fees to teams of highly paid fund managers to look after your superannuation, dramatically sapping your ultimate balance in the process.”

Creighton goes on to note that many investors are fleeing the “managed sector” and setting up their own self-managed superannuation funds where costs are (or should be) lower. We support these views and encourage suitably motivated and interested  investors to look at establishing their own funds and investing directly rather than sub-contracting out the process to external advisers, fund managers and platform providers who collectively act to dilute your earnings.