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THE BOLD NEW SUPERANNUATION APPROACH



Did you know in March 2020, Australian superannuation balances totalled $2.7 trillion, of which 48% was invested in equities? [1]


Another interesting finding is that from 21st February - 23rd March 2020, the ASX200, which comprises of Australia's leading share market index, fell by a massive 37%, having a devastating impact on many Australian’s superannuation assets.


The ASX200 has since recovered, however it still sits 17% below it’s February peak.


Very little of Australian superannuation investment is in residential property. So, what is the reason for this? Should you be looking to invest your superannuation in property?


Let's delve into the research to find out.


Residential Property Vs Shares

According to leading research house CoreLogic, national dwelling values in Australia from March - May 2020 performed as follows:

  • March 2020 = + 0.7%

  • April 2020 = + 0.3%

  • May 2020 = - 0.4%

Australian residential property has remained very stable and resilient, even in times of economic uncertainty.

The same, relatively stable performance was observed through the 2008 Global Financial Crisis, the 1991 recession, and many other globally devastating economic occurrences in the past.


There are many reasons for the stability and historically strong performance of residential property in Australia, however, the main reasons are:

  • Unlike shares, property is illiquid, with high transactional costs and settlement periods.

  • Property is a ‘consumption good’, meaning that it's far less volatile due to the relatively low investor ownership. Shares are 100% investor-owned, and highly influenced by sentiment. Whereas, residential property is 30% investor-owned on average, with the majority of property owned by owner-occupiers with a long term vision.

According to 2016–17 Multipurpose Household Survey (MPHS) conducted by the ABS, more Australians are remaining in the workforce beyond retirement

age than ever before, so correct asset selection is imperative to improve this statistic [2].

Should Superannuation Be Invested In Residential Property?

In the past, it has been very difficult to have superannuation invested in residential property unless a Self Managed Superannuation Fund (SMSF) is established, which can be an expensive and complicated endeavour.

Is there an alternative?

In short, yes there is!


In March 2018, a new superannuation fund, Superestate entered the market with a bold new approach deviating from the generic investment strategy of other funds.

Superestate purports to be the only Australian super fund focusing on residential property investment.

Upon joining, fund members are given the option to choose a percentage of their super to be invested in Australian residential property with the remainder in shares, infrastructure, and cash just the same as a regular fund.

According to the comparison website, Canstar:

Superestate is a retail super fund that claims to have been “born out of the need for all Australians missing out to get their piece of the property pie. According to the fund its investment strategy allows members to invest in Australian residential property without the large amount of capital that normal property investment requires.

Superestate are really paving the way for a new and innovative approach for superannuation funds.


If you did want to reach out to the Superestate team you can book a call with them to discuss your options here.


As always, it's important to factor multiple superannuation funds prior to selecting the fund you wish to proceed with.



Meridian Australia


P: (02) 9939 3249

E: info@meridianaustralia.com.au


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References

[1] Superannuation ASN Statistics

[2] ABS- 6238.0 - Retirement and Retirement Intentions, Australia, July 2016 to June 2017


Disclaimer: When considering investing in superannuation, it's always prudent to seek the advice of an appropriately qualified professional to determine which strategy is most appropriate for your individual circumstance.

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