Eureka Correspondence

Save our super, Magellan, ETFs and the RBA.

Magellan

I read elsewhere that Magellan Financial Group is launching an exchange-traded managed fund.  I would be interested to read your analysis of such an animal.

Keith

Editor's response: Thanks for your letter. Alan Kohler has published some thoughts on this topic in his weekend briefing on February 28 here.

This also includes a link to a video interview that Alan did with Magellan's Hamish Douglass. The video is here.

ETFs

Is there a managed fund or ETF that specialises in oil and gas? I feel that providing I take a long term view there is an opportunity to take advantage of the current depressed prices.

Ben Murphy

Editor's response: Thanks for your letter. There's a list of all the exchange-traded products that are listed on the Australian Securities Exchange on the ASX website here (choose the "ETPs" tab). This list includes two products focused on crude oil and one on natural gas.

If you are interested in international investing, a search on Google Finance shows a number of oil and gas ETFs listed on international exchanges: click here. Investopedia also has some information on the US context here.

brightday content director Kirstie Spicer, who has been researching managed funds recently, is not aware of any managed funds that only focus on oil and gas in Australia, but suggested investigating whether there are US-based managed funds that do this. She also mentioned two global resource funds: one from Pengana (here) and one from Colonial (here).

Save our super

Regarding Bob Gottliebsen's article on Super (Save our super, March 4), it might be worthwhile to consider individual cases. For example, my wife and myself, aged 74 and 73, have never been in receipt of a Centrelink pension, though we do have CS Health Cards. In today's dollars that has saved Treasury some $350,000. Now, since most of our super contributions were non concessional, that is, salary which had already been taxed at 49 per cent in the early eighties, I calculate that the net value of concessions to us, remembering that earnings on non concessional contributions were also taxed at 15 per cent until pension time, is of the order of $200,000 in today's dollars. If we manage to live for a few more years then Treasury will be even further ahead on their investment in us, and others like us.

Now that is a "back of the envelope" estimate, but it would be interesting to see some proper actuarial calculations on actual case studies, rather than the politically biased commentary currently emanating from Canberra.

William Jones

Perhaps Mr Gottliebsen should suggest that in the interests of fairness, the politicians' generous super scheme ought to be brought into line with everyone else's.

Roger

Thank you for your article. You won’t be surprised to learn that many of us share you anger. Treasury, ATO officials and politicians should share the blame with journalists. Indeed I do not believe that we are likely to attain enlightenment from the ignorant until all of them are required to have their own SMSFs.

We should add at least two more ignorance indicators to that of the $32B.  The first is the notion that SMSFs require internal investment expertise. As we know, but the ignorant apparently don’t, an SMSF may appoint external managers to manage all aspects of the fund including investment managers to manage the fund’s investments.  The fund may invest completely in managed funds balanced or otherwise, or allocate all of its funds to a public superannuation fund or even an industry fund if that industry fund is awake to the opportunity. How often do we read/hear about the lamentable lack of expertise of SMSF owners and the need for nannying from the ignorant.

The second is even worse. How often do the ignorant come up with the proposition that SMSF owners manipulate their affairs in order to access the age pension.  Seriously would anyone in their right mind reduce their living standards to that of a pensioner given an alternative?

As for writing to newspapers we will have to leave that to you. Many of us have tried!

David

Good article by Robert Gottliebsen regarding the misuse of the $32 billion cost of super. Accurate figures are essential for fair reforms. Keep up the good work. A point I would like to make in relation to cost is the use to which superannuants put any tax savings they may make and which may be about to be lost. What do they do with the money they save? They spend it which of course is just what the Government would do with any extra tax revenue. Charities are  a substantial beneficiary of this spending. Sure superannuants might not spend their tax free pensions on the sort of things the Government spends tax revenue on. Apart from charitable donations, small businesses such as restaurants are big beneficiaries. Significant tax increases on superannuants will cost charities and these small businesses plenty and is a cost which must be taken into account by Treasury when estimating the cost of the tax concession.

James

The RBA

I must say I was very pleased to read Alan Kohler's critique of the RBA (Kohler's Week, March 7). It is about time this was said because it has had me intrigued for years. Hedge fund investors have just been shaking their heads in disbelief that this carry trade into Aussie bonds or whatever could keep on giving, and still is. Meanwhile our economy is suffering because of it. Also agree regarding APRA.

David Macoboy

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