Issues that could make or break SMSFs in 2019

I attended the Sydney end of year lunch of the SMSF Association - the premiere body representing SMSF practitioners.

2019 is going to be a challenging year with several headwinds for SMSFs. This was expertly covered by speakers coming at it from different angles.

Key findings from ASIC’s Report 576

Tracey Besters from SMSF Design covered the key findings from the ASIC report on SMSFs released in June 2018. The reports are:

• Report 575: SMSFs: Improving the quality of advice and member experiences

• Report 576: Member experiences with self-managed superannuation funds

Source: ASIC website (REP 576)

My key takeaway from the talk was that trustees in SMSFs needed to be educated a lot more on the compliance measures, investment strategies and the costs of running an SMSF.

Outlook for 2019

Belinda Allen, Senior Economist from Commsec gave an overview of the outlook for 2019 for global as well as domestic share markets. The context for global uncertainty is the war between US President Trump and Chinese President Xi on the one hand, and between the Fed and President Trump on the other.

In Australia, the key indicators of economics are in the charts below. Household wealth, house prices and credit growth have all been on the decline. Consumer spending has also been flat in in recent months.

In addition, some key takeaways we got out of the session were:

• In the USA, tensions between the Federal Reserve and President Trump may be easing with the Fed suggesting recently they are approaching ‘neutral’ rate settings. This implies that the differential in interest rates between the USA and Australia won’t increase much further. As a result the AUD is forecast to reach 75 US cents by the end of 2019.

• Other headwinds for markets take the form of Brexit-related uncertainty and high volatility in oil prices.

• In Australia, it looks unlikely that there will be any increase in interest rates from the Reserve Bank of Australia through most of 2019.

• Share markets have seen a change in investor sentiment this year, with 2018 looking like it may be a net negative year for the ASX 200.

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Important Disclaimer. We do not provide tax or investment or SMSF advice. The buying of shares can be complex and varies by country. You should seek tax and investment advice specific to your situation before acting on any of the information in this article.

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