With the end of the financial year fast approaching, it may be the time for financial advisers to review certain strategies and ensure their clients are maximising opportunities. The following article provides a summary of common end of financial year (EOFY) opportunities, highlighting the potential tips and traps that are worth considering.

SUPERANNUATION 

Maximise concessional contributions – concessional contributions (CCs) are capped at $25,000 for the 2020/21 income year and will be indexed to $27,500 from 1 July, 2021.

Most advisers and their clients would agree that a key aim of investing is that over time, returns will beat the rise in the cost of living (after fees and taxes). 

In addition, it is important to try to minimise the risk of permanent capital loss. This isn’t mark-to-market losses driven by sentiment and noise, but losses that arise from a permanent diminution of business value.  

Thematic investing offers exposure to some of the major socioeconomic, environmental and technological themes of our times. It has increased in popularity over the years and is now more accessible than ever with an abundance of managed investments to cover a range of themes and trends. With clients increasingly interested in using them, how do you incorporate thematic investing within their portfolios?

WHAT IS THEMATIC INVESTING?

As investors, we are rarely given the twin tailwinds of cheap valuations and a supportive economic environment. The current rotation out of growth into value securities is a sign of the recovering global economy, and one that every government and central bank would like to see continue for some time yet.

In the past 12 months we’ve seen a rising tide of interest in sustainable investments – once considered niche, now many investors, and a growing cohort of financial advisers, acknowledge that funds and assets which take environmental, social, and governance (ESG) factors into account have become mainstream. Moreover, they are noticing that sustainable investments are performing in line with, or better than, regular investments. 

Russell Investments’ annual 2020 Value of an Adviser report found that the tax-effective investing benefit advisers provide to clients could add at least 1.5% p.a. to a client’s returns – representing a significant part of the overall value advisers deliver to clients. 

Tax has often been viewed as the realm of accountants. However, many advisers provide expertise on managing and optimising investment tax and do so with the help of managed accounts.

The COVID-19 pandemic has meaningfully hit most countries in the world, bringing with it a toll on human lives and livelihoods. As governments worldwide move to mitigate the public health crisis and support economies through monetary and fiscal policy, many are asking whether governments will stimulate their economies with investments in infrastructure.

Today’s investor is faced with minimal fixed income returns, late-stage equity valuations, and the prospect of growing market volatility. But now they may have somewhere to turn: convertible bonds. 

Convertible bonds are corporate bonds issued with a call option that gives the holder the right to convert the bond to equity shares, bringing together equity and fixed income properties in a unique combination. 

Auditors are the mid-point between a self-managed super fund (SMSF) and the Australian Taxation Office (ATO) and therefore have a statutory responsibility to determine whether the fund has met the superannuation standards in the Superannuation Industry (Supervision) Act 1993 (SIS Act). 

A fund that owns residential or commercial property should put in place procedures and supporting documents that the fund complies with the legislation.  

Here are some things auditors may be interested in:

1. WHO OWNS THE PROPERTY?