by Tony Zhang Updated Jul 01, 2021
SMSFs simply comparing the success of a portfolio against benchmarks is useful but not sufficient if looking to build sustainably higher returns in a fund compared to the market, according to an investment management firm.
Investors “running their own money” or working in tandem with their financial advisers need to possess a deeper understanding of the performance of the portfolio in rising and falling markets, especially when it comes to equities, according to Insync Funds Management.
Insync Funds Management chief investment officer Monik Kotecha said, for those using specialist managers, trustees increasingly expect those managers to outperform the market when it is rising but protect them in falling markets. Otherwise, he noted they can just buy a benchmark cheaply and accept a constrained return without any real alpha contribution.
“This is important because, at the most basic level, a portfolio that falls less than the market is protecting member assets, and for people in pension phase, or getting close to retirement, that means a longer period before money runs out, or a higher living standard,” Mr Kotecha said