Eureka Correspondence

Fund managers, international investing, gold and SMSF pensions.

Fund managers

The year to year outcomes for fund managers discussed in The awful truth about fund managers by Scott Francis (January 21, 2015) is just an example of the well-known statistical phenomenon of “reversion to the mean” (also called regression to the mean). That states that the greater the deviation of a random variant from its mean, the greater the probability that the next measured variant will deviate less far. In other words, as all fund managers form a group with similar skills working in a restricted environment, then an extreme event (good or poor performance in a year) is likely to be followed by a less extreme event (worse or better performance in the following year).

So do not be surprised that what appear to be good managers perform poorly in the following years. If you want to get good results next year do not select the best performer from last year.

John Widdup

International investing

Some time ago, Eureka Report published an article re obligations to ATO with personally managed international share holdings. I recall it was a comprehensive guide but unfortunately I can't find that article.

Given recent international share coverage, I wonder if that could be published again or tell me where I can find it please.

Les Smith

Editor’s response: Thanks for your letter. The article is here: Buying overseas stocks: A Eureka guide (July 28, 2014). You might have also seen a more recent article: Buying shares offshore: Tax issues you need to know (January 21).

Buying gold

Where can I buy gold in Australia and how?

John Wu

Editor’s response: Thanks for your letter. We have today published an article by Tim Treadgold explaining how to buy gold: Who's buying gold ... and how you can join them (January 28).

SMSF pensions

I write concerning the Government’s desire for one’s retirement SMSF to last a lifetime.

The requirement to take an ever increasing pension, ie 6% at 76, 7% at 80 etc is contrary to this stated need (see The lessons from Don Argus’ SMSF versus the ATO, January 21).

Currently at 76 I find this income is greater than my needs, and have the distinct possibility of depleting my capital prematurely.

Judging by the life span of my immediate long-lived ancestors, the account-based pension may run out before I do because of these excessive withdrawals.

Nev Radcliffe