Super Account – Standard Index Funds or Buy ETF Directly?

[Peter Teoh]

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Hi,

I’m deciding whether to stick with standard indexed funds in Hostplus or ‘self-managed’ by directly purchasing ETFs via the Choiceplus platform in my super account.

Currently, I’m with Hostplus Super, which allows me to use their Choiceplus platform to buy a limited selection of ETFs (attached PDF) & top ASX 300 shares. There are rules regarding the maximum percentage I can hold for each ETF or share. Ultimately, I can replicate a Jupiter portfolio by with the below setup:

• 40% in IVV (because they don’t have a hedged version. Alternately, I can put in VGAD, hedged version of VGS)
• 10% in VGE (They don’t have FEMX, so the index version is the next best)
• 5% in IAF
• 5% in BILL (They don’t have AAA, using this as an alternative)
• and 40% in AU Indexed fund in Hostplus (similar to VAS holding with 0.04%PA fee, and I need to put 20% of my funds in my Hostplus account.)

Based on my fund balance, the above setup will cost me an additional $272/year in fees, but based on 10 years’ ETF performance, I’ll be $645/year better off. My investment period is 25 yeras, which makes the additional gain attractive, especially with compounding for 25 years.

• Is it worth the trouble to do this compared to a standard index fund in Hostplus (VAS & VGE equivalent)?
• Would I incur more tax by doing this?
• What is the implication for me near retirement age? Do I need to sell all my holdings and incur capital gain before the pension stage?
• Choiceplus allows me to buy shares directly. Would this benefit me in the super account?
• Is there alternate options for me to utilise the Choiceplus platform?

Thank you.

• This topic was modified 1 month, 2 weeks ago by Peter Teoh.

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[Kevin Fung]

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Hi Peter,

Thanks for your post and it looks like you may be after some some more personalised financial advice. Unfortunately, this is an area we can’t stray into, but I can offer some general suggestions.

It sounds like you might be after some greater control and/or flexibility over your investments, so it might be worth considering a Self-managed super fund (SMSF).

Some experienced investors prefer this route, but your own decision will depend on your investment objectives, financial situation and needs. As well as weighing up added responsibilities, including compliance with regulations, increased costs and administrative tasks.

Unfortunately, I haven’t used either Hostplus or the Choiceplus platform, so can’t comment on these. Perhaps some of our other members have and they can weigh in?

With some of your other questions, we would recommend probably having a chat with an accountant and/or financial adviser who can carefully consider your investment goals, risk tolerance, and time horizon.

Cheers,

Kevin

[eaglemick]

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Hi Peter,

I would echo Kevin’s comments and take a look at an SMSF.

I moved all my family’s super to an SMSF towards the end of 2022 as I felt the fees were getting too high as my investment pot increased and I also wanted control of my investments.  I’m now paying less fees and thanks to the many great articles on the Rask site I’ve got a nicely balanced portfolio of 12 core ETF’s that’s performing well.

An SMSF may not be for everyone but as a Finance Director, I’m happy being actively involved!  I would suggest taking a look at the Superguide website as it’s a great resource to investigate if you think an SMSF is something for you.

 

Mick

[slt]

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Hi Peter,

Not a Hostplus member, but have you asked them if they can provide limited advice related to their product and your questions?
One of my superfunds actually provided reasonable telephone advice and the option to book a 1hr session for about $300 if required.

My limited knowledge of Hostplus is that they performed quite well on the gov super compare chart for their standard offerings. I recall a podcast a while ago where it was noted that the Hostplus demographic was much younger than other superfunds.  They tended to invest more in less liquid assists such as infrastructure, private equity as they knew that their members would not be transitioning to pension phase anytime soon.  Not sure if this is still the case.
I think a benefit of sticking with an industry fund is their ability to access alternative asset classes.

[Kevin Fung]

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Great points SLT, industry funds to provide opportunities to invest in alternative assets which typical privately managed SMSFs would be unable to access.

Additionally, with those less liquid assets like private equity or infrastructure projects, investors should keep in mind their unit pricing may sometimes be updated less frequently (vs daily priced assets like shares). This often may also lead to them appearing less volatile too.

[Peter Teoh]

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Thank you Kevin, Eaglemike & Slt for your input.

I prefer a direct approach rather than leaving to the fund managers. I agree that SMSF is what I’m after. However, my fund is still small and working to increase my pot before making the move. Hostplus/Choiceplus is just in between option for now.

I remembered reading Hostplus and most Superfunds have high illiquid assets which does not sit well with me. Hence, I prefer to manage my current funds by myself.

I saw the Hostplus financial advice session. I haven’t considered yet. Will reach out to them for more information.

 

 

 

[Dan Quinn aka Eoincuinn]

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@peter_teohts I have an SMSF for exactly this reason, I have absolute control over what every cent is invested in.

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