No SMSF for this active investor (Part 2)

by Greg Hoffman

AustralianSuper is an attractive option for my superannuation, as I explained in my previous post (with an all-in cost of less than 0.65% on a balance of around $100,000). But it's not all rainbows and unicorns.

Here are the drawbacks in the order that they currently impact me:

• Stocks limited to ASX300: While this is a pretty good list, I often find excellent value outside of this index (for instance, the three stocks I highlighted for Share Advisor members in a June special report: Gage Roads Brewing, Jumbo Interactive and Swick Mining Services);

• No choice of funds: I can select from a menu including 'International Shares', 'Property', 'Australian Fixed Interest', 'International Fixed Interest', 'Cash' and a few others. This gives me the opportunity to make some broad asset allocation decisions but I'm limited to the mix of funds selected by Australian Super in each category. I'd prefer to have more choice in this regard;

• 80% overall restriction on direct listed investments (and 20% in any single stock): Currently this isn't causing me too many problems but it did when I had a smaller balance. It's presumably a risk management measure to protect inexperienced investors from over-allocating to listed shares or any single stock. Unfortunately it can hamstring more sophisticated investors. For instance, after taking into account my investments outside of super, it may be perfectly appropriate for me to invest my entire super fund in direct shares, and even a high proportion in a single stock. The bulk of my wealth sits outside super, so I tend to run my fund rather aggressively;

• Member Direct is clunky: Managing my in-fund share portfolio requires a second login (separate to my overall fund login). You get used to it but it'd be better if you didn't have to;

• No voting at meetings: This is not a big deal for most investors but I'd rather have a say than not – especially in relation to corporate transactions, for instance;

• Participation in rights issues or share purchase plans: These can be a handy way to build your holding in a stock at times, or avoid being diluted. In the comments on my first post, some people reported missing out on these through Member Direct but AustralianSuper have told me that this should be fixed for most corporate actions now.

At the moment, for my needs, the benefits offered by AustralianSuper easily outweigh these drawbacks. But when my balance gets to the $200,000 mark, I'll re-assess. But by then AustralianSuper may have added more choice (in funds and perhaps individual shares) and so I might be happy to stick with them.

The other factor that may cause an early re-assessment is the continued growth of the Intelligent Investor Value Fund. Steve Johnson (the fund's Chief Investment Officer) has said that he will close this fund to inflows once it gets to $200m. While that currently seems some way off, if he and his team continue to put impressive numbers on the board it may arrive sooner than you'd think.

So if that were looking likely I might bite the bullet, set up a Self-Managed Superannuation Fund (SMSF) and invest a hefty portion of it in the Value Fund (with a good dose of the International Fund, to boot!).

For the time being, though, I'm content with AustralianSuper and its Member Direct option.

At Intelligent Investor Super Advisor, we'll be keeping an eye on such offerings for those, like me, who are keen to have a lot of control over their own super fund but aren't yet ready to incur the cost and hassle of setting up and running their own SMSF.

In the meantime, we'd love to hear from anyone who uses Sunsuper, ING Living Super or other similar products. How do you find them? Do they provide more flexibility than AustralianSuper seems to? Are their websites more user friendly?