More SMSFs to invest in international stocks

A recent report from the Australian Securities and Investments Commission (ASIC) has highlighted dodgy advice from property one-stop shops will drive more self-managed super fund (SMSF) trustees and operators to explore international investment opportunities, according to Monex Securities Australia.

The firm said in that report ASIC emphasised that people were being encouraged to set up an SMSF to invest in property, with a growing use of property “one-stop shops” offering poor advice which did not take into account clients’ personal circumstances and did not serve their best interests.

The other key finding of the ASIC report on SMSFs included:

• Family members and friends or colleagues were collectively the main prompts for setting up an SMSF, followed by advice from financial advisers and accountants,
• A number of members saw an SMSF as a vehicle for investing in property and were motivated by a fear of being locked out of the property market,
• Many members lacked a basic understanding of their SMSF and legal obligations as SMSF trustees.

As a result, SMSF managers might see it become harder for SMSFs to invest in property and therefore would consider seeking investment opportunities in international share markets.

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According to Monex managing director, Alex Douglas, technology also made it much easier and more efficient for both SMSF and retail investors to look at overseas investment opportunities.

“The ASIC report on the state of SMSF advice is scathing and worrying at the same time,” he said.

“If it becomes harder for SMSF trustees to invest in property, then we expect to see more SMSF managers seeking opportunities for investment in international share markets.”