Challenging time for offshore equities

April 13, 2023

The latest issue of selfmanagedsuper magazine has just been released, with a feature article from Talaria Co-CIO Hugh Selby-Smith on Self-Managed Super Fund (SMSF) rule changes and the challenges for equity investors in the current market – in particular the USA.

A  SMSF must pay age-based minimum amounts each year to a member from their pension account.  As a response to the disruption caused by Covid-19, the Australian Government temporarily reduced these minimums by 50%.

However on 1 July 2023 the minimums will revert to pre-pandemic levels. For example, an SMSF member aged between 65-74 will have to take as income a minimum of 5% of their account balance, up from the current 2.5%.

At all times the challenge for SMSF members is to grow or at least preserve their capital whilst satisfying the rules regarding withdrawals.  In cases where the assets of an SMSF portfolio generate less income than the required minimum drawdown, retirees must sell down capital to fund the shortfall. This becomes a problem if they are forced to do this at the wrong time.

For investors in global equities this risk of being what is known as a ‘forced seller’ is currently acute.

Read the full piece here

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