SMSF DIY Guide: Everything you need to successfully set up and run your own Self Managed Superannuation Fund

Chapter 6: Portfolio management and asset allocation

Asset allocation — how you spread your money across different kinds of investments — is one of the most important aspects of managing your money in your self managed super fund. At its recent Australia-wide SMSF Roadshow, the ASX suggested that 98 per cent of your returns are a function of your asset allocation and just 2 per cent are the result of stock-picking. This means that your investment return will vary greatly depending on how much of your money is invested in each asset class — principally cash, fixed interest, shares or property.

We have seen regular 20 per cent rises and falls on global sharemarkets in recent years, so if your money was allocated 100 per cent to fixed interest, ...