Weekend Edition: With equities, is it a year for playing it safe at home?
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How did the Magnificent Seven’s performance affect Australian equity investors?
Well it's been a fantastic year for the magnificent seven, but what about other shares in America and here in Australia? How do you create a balanced portfolio when so much is being made by so few? And how are buyers of equities in Australia making their decisions? We'll look at all of that today. The morning call from NAB with Phil Dobby. The weekend edition. Well, it's been quite a year and it's not over yet, and we know next year is gonna get off to a rocky start because uh Donald Trump gets his new gig in the White House and maybe we'll see more delays from central banks when it comes to moving down on interest rates, which could keep bond yields uh a bit higher for a bit longer. So what does all of that mean for equities?
Let's talk to Gemma Dale, Director SMSF and Investor Behavior at NAB. So Gemma, I feel like we should start with SMS. SMSF, seeing as it is in your job title. Uh so uh I mean this year I'm assuming we saw many more people deciding their own fate, and I'm sure ETFs have helped in all of that. Is that is that a fair assumption?
So the question is super interesting and funnily enough, the biggest driver for new SMSF establishments, there have been two. One is negative investment returns. So the real peak in new establishments was post GFC when we saw a huge number of people, and they said this explicitly in focus groups and surveys and so on. So we were not hypothesizing about why this happened. And opening their statement from their public office super fund, from their employer fund or their industry fund, seeing that they'd lost ten percent of their balance despite the fact they were contributing and going I'm just gonna give this a go myself. I'm damned if I'm going to pay somebody else to lose money. Well why sh
exactly, why should uh 'cause obviously I'll be able to do better than the professionals at this, uh from a complete starting point.
Well funnily enough, they weren't even naive about their own ability to manage better. They just really resented having paid somebody else to deliver that kind of return. Right. Th the other major catalyst was legislative change and we saw the ability to borrow to buy property, particularly residential property inside self management funds. It's inside any fund, but self-managed funds are the only way it's practical. Uh As a massive driver of new establishments sort of post two thousand and eight also. So those things drove a huge number of new establishments. Then markets performed quite strongly. It became much more difficult to borrow inside super because banks and others worked out just how difficult it was to ensure that people were meeting their regulatory obligations.
You can't uh rent that property to yourself, for example. Or your kids, there's a lot of restrictions about what you can and can't do, and they can't police that. The ATO can. And if you are found to be in breach of your obligations and your responsibilities as an SMSF trustee, you can lose up to half the assets of the fund. So that's no fun. You are. Big withdrawal of lending liquidity from that market. Far fewer establishments. You're doing pretty well in your public offer fund. There's no real incentive to go and set up a new one. Because what are you gonna do? You're just gonna replicate the same kind of portfolio. So we didn't see a huge uptick for quite some time. It actually started contracting. And we also saw a real increase in wind ups, which was interesting.
As people get older, there is uh a real increase in the number of people who are going, I'm no longer comfortable running my own fund or and because most funds are husband and wife, they're a couple, one gets dementia, goes into a care facility, passes away, so on. So good reasons to wind them up in that situation. So we saw at one point uh basically a steady state for the year, uh the same number of wind ups as establishments. We've just seen another uptick in establishments though, the first really big jump in a long time, and our hypothesis is that is the proposed uh tax increase for those with balances over three million
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Chapters
6 chapters
1
How did the Magnificent Seven’s performance affect Australian equity investors?
0:01–5:13
2
What are the two main drivers behind the recent surge in new SMSF establishments?
5:13–10:44
3
How are Australian SMSFs using ETFs to simplify portfolio management?
10:44–17:35
4
What impact could a stronger US dollar and Trump‑era trade policies have on Australian stocks?
17:35–23:17
5
Why have Australian banks outperformed other sectors and why are they considered a ‘widowmaker’?
23:17–28:01
6
Which high‑growth Australian companies could deliver strong returns next year?
28:01–29:12