Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm
Speaker 1: James Kirby, Well, the editor at The Australian. Now, folks,
Speaker 1: we've had a few days to digest what it all
Speaker 1: means about Donald Trump arriving rebounding back into the White House.
Speaker 1: But what does it mean for investors? And this is
Speaker 1: actually a very front end center and extremely important development
Speaker 1: for investors. There are aspects to it about our market
Speaker 1: that's going to matter straight away, for instance the big miners.
Speaker 1: That's going to be tougher for them, for instance. But
Speaker 1: more importantly really is that if you don't have global shares,
Speaker 1: you should have and if you're not in you can't win.
Speaker 1: It's as simple as that. Now, if you look at
Speaker 1: our market over the last over the year to date,
Speaker 1: over the last twelve months, we are up something in
Speaker 1: the order of eight percent, Okay, and that sounds fine.
Speaker 1: Here's the thing. The US market's already up twenty four percent, right,
Speaker 1: three times more. You're making three times more money in
Speaker 1: the US and no one knows the future. But does
Speaker 1: every indication that this Trump bump as they called it
Speaker 1: when he was in power the last time, will continue
Speaker 1: this time? I would actually argue the conditions for shares.
Speaker 1: US shares are better now than they were, particularly blue
Speaker 1: chip US shares, not so much the tech leaders and
Speaker 1: smaller and medium cap American shares. And just as the
Speaker 1: week has passed, starting to see the shape of this
Speaker 1: Trump financial administration, which is all the show is interested
Speaker 1: about on this occasion. So we're getting people like Idan
Speaker 1: musk Is going in as to what they called the
Speaker 1: efficiencies are We'll see how that works. I imagine Ian
Speaker 1: mrsk has about five hours a week to give to
Speaker 1: that job. But importantly, probably more importantly, it's a man
Speaker 1: called Scott Bessent, because in its Treasury secretary, that's an
Speaker 1: extremely important job. He's a fund manager, billionaire fund manager.
Speaker 1: So whatever else he is capable of, we'll assume that
Speaker 1: he is a pretty capable investor. And you can see
Speaker 1: straight away that the American share markets continues to rise,
Speaker 1: and so does our market. Now, what I'm really interested
Speaker 1: in is what have Australians actually been buying and investing
Speaker 1: in up until now on the US markets and on
Speaker 1: our own markets as well, where you can easily buy
Speaker 1: ASX listed ETFs that are that are invested in the
Speaker 1: US market, which is a very simple way in actually,
Speaker 1: but also is it changing and how might it change?
Speaker 1: I've got the ideal guests. She's been on the show before.
Speaker 1: It's Jemma Dale, head of investor behavior at Naptrade, that
Speaker 1: is the online broker. How are you, Jemmer, I'm well, thanks,
Speaker 1: How are you good? Good to have you on the
Speaker 1: show again.
Speaker 2: Lovely to be here.
Speaker 1: We have talked in the past about this whole area.
Speaker 1: Before we start, just tell us give us a picture
Speaker 1: of you would of what we might call the traditional
Speaker 1: situation with Australia and the Wall Street share market. I
Speaker 1: gather it was largely younger by that, I mean under
Speaker 1: thirty five that were actively buying individual shares in the US,
Speaker 1: and older investors were a bit slower, but occasionally they'd
Speaker 1: buy ETFs. Is that still the case and what shares
Speaker 1: do they like?
Speaker 2: Yeah?
Speaker 3: Such a good question because the demographic shifts, I think
Speaker 3: how largely due to what was available at the time
Speaker 3: people started investing.
Speaker 2: Yeah.
Speaker 3: Really, it's not that people are lacking in education or
Speaker 3: even appetite for a lot of different things. It just
Speaker 3: depends on what is easy and accessible at the time
Speaker 3: you started. So most of our older investors have fairly
Speaker 3: rich and deep bossy equities portfolios. They started, let's say
Speaker 3: the nineties with the big floats, so they owned CBA
Speaker 3: and they bought it very cheaply and they've done very
Speaker 3: nicely out of that. And they owned BHP, and they
Speaker 3: own the big Australian companies, and they would have bought
Speaker 3: Woolies in the float, all those sorts of things. And
Speaker 3: a lot of our baby boomer investors have these portfolios
Speaker 3: that are dominated by big Australian names. They're very familiar
Speaker 3: with the companies, they know what they do, they've held
Speaker 3: them for a long time. They probably have quite substantial
Speaker 3: capital gains liabilities attached to those positions, and it has
Speaker 3: taken them time to diversify offshore because pre let's say
Speaker 3: two thousand and ten, you would be mostly probably twenty fifteen,
Speaker 3: let's be honest, mostly looking at unlisted managed funds.
Speaker 2: If you wanted to.
Speaker 3: Buy international equities and diversify your portfolio. The big thing
Speaker 3: people used to buy was Platinum Asset Management, Platinum International Fund.
Speaker 3: They would buy that as an LIC. So there's a
Speaker 3: lot of stuff that people did hold that they would
Speaker 3: buy quite time ago and some of the other listed
Speaker 3: international options.
Speaker 2: But broadly speaking, they just built their.
Speaker 3: Portfolios in domestic equities and then they've taken their time
Speaker 3: to get more international exposure. And online brokers have made
Speaker 3: a big difference. It's much much cheaper and easier to
Speaker 3: buy stuff now that is not just domestically focused. You
Speaker 3: don't have to buy it in the float and then
Speaker 3: wait for your statement every six months. And also you
Speaker 3: can buy directly.
Speaker 1: You can just buy a thousand dollars worth of Walt Disney,
Speaker 1: or you can buy a thousand dollars worth of Coca Cola.
Speaker 1: That was just impossible.
Speaker 3: Basically, it's impossible, and if you could do it, you'd
Speaker 3: have to ring a broker and it cost you one
Speaker 3: hundred dollars to buy a thousand dollars worth of stock,
Speaker 3: so it was very difficult.
Speaker 2: So now it's much less expensive.
Speaker 3: It's very transparent as well, so you can see what
Speaker 3: you're paying an FX, you can see what you're paying
Speaker 3: for the stock. All those sorts of things. You can
Speaker 3: hold them in roughly the same portfolio. So younger investors
Speaker 3: that's how they've chosen to invest, because they have access
Speaker 3: to it and it's affordable and The other thing I
Speaker 3: think that's made a dramatic difference is we've got really
Speaker 3: high quality research now, realisticly for free everywhere Google, but
Speaker 3: also inside your platform.
Speaker 1: You have to be special to get that research.
Speaker 3: The research you can get now on the standard platform
Speaker 3: is better than the average fund manager had in the nineties. Right,
Speaker 3: It's amazing what's available. So it's just much more accessible.
Speaker 3: Funnily enough, though, yes, we do have younger investors who
Speaker 3: buy directly offshore, so NAB traded to US, UK, Germany,
Speaker 3: Hong Kong, there are other markets. Obviously ninety plus percent
Speaker 3: for US as in the US. That's really what people want.
Speaker 1: Yeah, and why wouldn't it be, because the vast majority
Speaker 1: of the MSCI, the Morgan Stanley Capital International Index is
Speaker 1: US anyway, and that's probably even more true with each
Speaker 1: passing year as the US does so well. But tell
Speaker 1: us then, what up until very recently were the favorite
Speaker 1: stocks or funds, which invariably will be ETFs that Ustreans
Speaker 1: have been buying on Wall Street.
Speaker 2: So it's an awesome question.
Speaker 3: It's actually been quite concentrated at the top end. There's
Speaker 3: a really long tale of individual things that people will buy,
Speaker 3: but they tend to be one or two trades a day,
Speaker 3: like the very it's a long long tail, but it's
Speaker 3: very concentrated at the top end.
Speaker 1: Yeah, bits and pieces, but we are so who's at
Speaker 1: the top end, So.
Speaker 3: If we strip out the rats and mice, it was
Speaker 3: all about Apple for probably the first five years that
Speaker 3: we had international trading available, leading up until COVID. Then
Speaker 3: there was a real regime shift, if you want to
Speaker 3: call it. That all about Tesla. And I think I've
Speaker 3: told you this before. At one point Tesla was our
Speaker 3: eleventh largest holding on the platform, above Rio, above Woolworth's,
Speaker 3: above all of these big Australian names. It was enormous,
Speaker 3: big chunk of that was capital appreciation, like people who
Speaker 3: bought it relatively cheaply and it had just run very hard.
Speaker 3: But it was all about Tesla for a while. It's
Speaker 3: still largely about Tesla apart from those people who bought
Speaker 3: in video and it's rocketed and that is a capital
Speaker 3: appreciation story, much smaller base.
Speaker 1: Oh yes, yes, in Vidia of course, Yeah, the AI
Speaker 1: chip maker supreme. Okay, so in Vidia being the new
Speaker 1: kid on the block, Apple being the original of the species,
Speaker 1: Tesla all the time, I expect and still there anything
Speaker 1: else Berkshire Hathaway Microsoft.
Speaker 3: So then you get the other sort of megacap tech
Speaker 3: names plus Berkshire Hathaway. So Berkshire Hathaway absolutely, and I
Speaker 3: love it when you occasionally see someone buy their Class
Speaker 3: A shares, which are many hundreds of thousands of dollars.
Speaker 3: Remember the first time I saw a single three hundred
Speaker 3: and fifty thousand dollar stock and I was like wow,
Speaker 3: but people would buy one.
Speaker 1: But generally you can buy it cheaper, right because it's
Speaker 1: Class B and.
Speaker 3: So you can buy Class B which is the split version,
Speaker 3: it's the same thing, and you can buy smaller parcels.
Speaker 3: So yes, we see Berkshire Hathaway absolutely, and people do
Speaker 3: like to accumulate that over time. Microsoft absolutely big favorite
Speaker 3: last twelve months in particular. It's sort of got a
Speaker 3: bit on sexy for a while there, but it's very
Speaker 3: much back Apple, Amazon, Alphabet, Microsoft, All of the sort
Speaker 3: of Magnificent seven names are in there, but it's very
Speaker 3: much the more sexy consumer facing stocks that were super popular.
Speaker 3: Meta was never that big, which I find really interesting
Speaker 3: because it's not quite as.
Speaker 1: Fun right well, it's for all of Colster Meta being
Speaker 1: Facebook the shares. Okay, now here's the thing. So those
Speaker 1: are the main shares, and you didn't mention ETFs, but
Speaker 1: I think they'd probably be a very good proxy for
Speaker 1: interest as well. So far, what ETFs exchange traded funds,
Speaker 1: index funds are popular that people are using to buy
Speaker 1: the US market and Wall Street.
Speaker 3: Yeah, this is such a good question, right, because you
Speaker 3: do have the option of just buying a domestically listed
Speaker 3: ETF that gives you the EXPOSU and the underlying holdings.
Speaker 3: It's not a synthetic, so you're buying that exposure, but
Speaker 3: you're just buying it at home, and it's much easier
Speaker 3: from a tax perspective. It's just a bit cleaner for people.
Speaker 3: ETFs they start with the ASX two hundred, and I
Speaker 3: find this fascinating. So if you look at our numbers,
Speaker 3: it's ASX two hundred daylight global exposure, but as you say,
Speaker 3: it's based on Miski World usually, and so it's mostly
Speaker 3: US exposure.
Speaker 2: And then SMP five.
Speaker 1: Hundred, okay, not NASDAK look here and.
Speaker 3: There, but it is not anywhere near as dominant as
Speaker 3: you would imagine it would be. Okay, Niche exposure is unkind,
Speaker 3: but it's very much a sleeve of people's portfolio. They
Speaker 3: start with the ASX two hundred to build a core,
Speaker 3: and then they go for these other things. And they'll
Speaker 3: go S and P five hundred, First or World and
Speaker 3: then they'll go specifically Nasdaq or some other neat.
Speaker 1: Okay, all right, that's interesting. And the individual shareholdings are
Speaker 1: what are There is a bigger money in them than
Speaker 1: in the ETFs.
Speaker 3: In aggregate, they're probably close to even. But when you
Speaker 3: consider the ETFs are a handful and the US equities
Speaker 3: is a long list of things. And I did say
Speaker 3: when you look at the individual trades, the will be
Speaker 3: one or two things.
Speaker 2: What's fascinating is.
Speaker 3: In the one or two trades at night, some of
Speaker 3: them are half a million dollars, so they're not one
Speaker 3: thousand dollars. Some of them can be enormous and much
Speaker 3: larger sometimes with people with very specific preferences. It's just
Speaker 3: there's not a large pool of people without preference.
Speaker 1: Okay, okay, really interesting. One thing I want to talk
Speaker 1: to you about just quickly before the break is this.
Speaker 1: HSBC issued a survey recently and they said the number
Speaker 1: of Australians intending to invest overseas is actually declining, and
Speaker 1: that less intend to do it next year compared to
Speaker 1: last year, which I found a baffling, be hard to believe.
Speaker 1: This was before Trump was elected. Button, what do you think?
Speaker 2: Look the joy of my job.
Speaker 3: We see a lot of surveys and we participate in some,
Speaker 3: and we ask our customers and our clients to participate
Speaker 3: in some that are run by third parties. And there's
Speaker 3: always a fascinating lag but doing what people say they're
Speaker 3: going to do and what they actually do. I can
Speaker 3: guarantee you if the market falls twenty percent in three
Speaker 3: weeks like it did in COVID for thirty percent three
Speaker 3: weeks during COVID, we will see a massive influx into
Speaker 3: Australian and international equities one hundred percent. I would put
Speaker 3: my house on that people will do what the market
Speaker 3: presents them with as an opportunity. So if the market
Speaker 3: continues the way it has, I can see people being
Speaker 3: reluctant to put more money into US equities if they
Speaker 3: fall off a cliff, I can see them chasing them
Speaker 3: very hard.
Speaker 1: So you think because they think they've run too hard.
Speaker 3: So very clearly in our data set, you can see
Speaker 3: that people are nervous about where the market is. You
Speaker 3: ask which stocks people hold and what they trade, but
Speaker 3: if we talk about what they're doing, Tesla is more
Speaker 3: of a sell than a buy at the moment. In
Speaker 3: video is more a sell than a buy at the moment,
Speaker 3: and that is primarily because people think they're quite toppy,
Speaker 3: and also their portfolios get really out of whack. If
Speaker 3: you've hold held those things for a while, you can
Speaker 3: end up with fourteen percent of your fourteen percent of
Speaker 3: your portfolio in a handful of things.
Speaker 1: Or ninety or ninety depending.
Speaker 2: On when you're starting what else you've got. So people
Speaker 2: you know they will rebalance at some point. It's going
Speaker 2: to come back.
Speaker 3: So our investors do get nervous when the market's really
Speaker 3: toppy and they will take money off the table. We
Speaker 3: see it in Australian banks in particular this year, like
Speaker 3: they've just been.
Speaker 2: Trimming and trimming.
Speaker 3: Because they go one hundred and fifty dollars for CBA
Speaker 3: is mental. It didn't grow its revenues by fifty percent.
Speaker 1: That's right, and every broker in town says they're worth
Speaker 1: a hundred. Yeah, but every broker's wrong so far Okay,
Speaker 1: we'll hold it. We'll hold it right there. Back in
Speaker 1: a moment. Hello and welcome back to the Austriallians Money
Speaker 1: Puzzle Podcast. I'm James Kirby. I'm talking to Jemma Dale
Speaker 1: from NAB, head of Investor Behavior. Always great to talk
Speaker 1: to Jemma. Very good to culture this week as we're
Speaker 1: starting to get a sense that we were starting to
Speaker 1: understand first of all, that Donald Trump is back. More
Speaker 1: than that that's a Republican president markets like Republican presidents.
Speaker 1: It's entertaining, I must tell you historically to find out
Speaker 1: that on an annual basis that Democrat presidents during their
Speaker 1: regime have higher returns paranum on the market than Republican presidents.
Speaker 1: Republicans would argue that the Republicans come in and clean
Speaker 1: it up, of course, just like the Libs would argue
Speaker 1: that's what happens here. But we'll put that to one side.
Speaker 1: There are the facts that that Democrat president sees paranum
Speaker 1: returns have been higher than Republican presidents over a long
Speaker 1: period of time, and I've done a whole report on
Speaker 1: that in the Australian recently. But here's the point I
Speaker 1: want to make. So the thing with Trump is that,
Speaker 1: of course there's this sugar hit at the start and
Speaker 1: excitement by the markets because they've got a pro market
Speaker 1: president coming. In longer term, there's concerns about Tariff's protectionism
Speaker 1: and other issues such as strength of the US dollar
Speaker 1: and what that might mean, bond yields which are being
Speaker 1: going up even though the US FED has been cutting rates.
Speaker 1: So various signals coming out there. But from an investment
Speaker 1: point of view, I think, folks, the outstanding dimension of
Speaker 1: this is that there's a sense that the US markets
Speaker 1: will continue to be good, but it won't be the
Speaker 1: big tech stocks. This is the narrative at the moment.
Speaker 1: We don't know if it's right around, but the narrative
Speaker 1: is that the big tex stocks will struggle now under
Speaker 1: a Trump because he's not as globalist as his predecessors.
Speaker 1: That's one thing. Secondly, then that implies that the traditional
Speaker 1: US blue chips, the Coca Colas, the Disneys, that they
Speaker 1: will actually do better than the magnificent seven protesla to
Speaker 1: one side, because obviously test it's just this complete one off,
Speaker 1: and now you have Musk literally inside the White House cabinet.
Speaker 1: And then also there's a sense that US small caps
Speaker 1: will do better than big caps, and I are certainly
Speaker 1: looking at the US small cap ETFs. They have been
Speaker 1: really good. Forty three percent I see up in a
Speaker 1: year on the US small cap ETFs. That is a
Speaker 1: hell of a return for an ETF. What do you
Speaker 1: think about that, Jemmy, Do you think you don't see
Speaker 1: anything in your numbers to suggest that people are moving
Speaker 1: in that way yet responding to those ideas.
Speaker 2: I think it's really interesting.
Speaker 3: We we're only talking a week ago that people were
Speaker 3: thinking this would be an extremely tight election. No one
Speaker 3: was predicting a clean sweep, no one was predicting a
Speaker 3: very dominant Trump presidency. And so the fact that everyone's
Speaker 3: come out and gone right, this is what's going to
Speaker 3: happen in the market is hilarious to me because we
Speaker 3: were all wrong about a week ago about pretty much everything.
Speaker 3: Pundits and polsters. Some would argue that the betting markets
Speaker 3: were accurate, but even those took a while. They moved
Speaker 3: very hard on the day, they took some time.
Speaker 1: They were right in the last forty eight hours, yeah.
Speaker 3: They were, but forty eight hours no prizes, surely, but
Speaker 3: you had a favorit of data to work with in
Speaker 3: the last little bit. So it's quite fascinating to me
Speaker 3: that everyone's got a strong view and they're very confident
Speaker 3: what's going to happen now and you should shift accordingly. Look,
Speaker 3: there have been I'm just trying to unpick all the
Speaker 3: different parts of that. The one that you haven't mentioned
Speaker 3: that I am hearing.
Speaker 2: A lot is energy. That energy has to be part
Speaker 2: of the mix because there.
Speaker 1: Is a specifically old world energy gets a better run.
Speaker 2: Ye traditional energy.
Speaker 1: Traditionally oil and gas.
Speaker 3: Yeah, let's call it traditional energy. A couple of different things.
Speaker 3: One is there's just this insane demand for energy for
Speaker 3: building out AI.
Speaker 2: And data centers.
Speaker 3: So that's a story that's been going all year and
Speaker 3: everyone's talking about it, and pretty much every fund manager
Speaker 3: I speak to is like, look and as are.
Speaker 2: What they are.
Speaker 3: We've already seen in video run super hard. On the
Speaker 3: sort of more tech side of things. Realistically, is how
Speaker 3: you're going to fuel these things. That's the issue. And
Speaker 3: let's talk about the data centers and how we power them.
Speaker 3: And that's why uranium's on a run, because we think
Speaker 3: nuclear might be the solution. We're going to talk about
Speaker 3: three Mile Island.
Speaker 2: All of this stuff. So there's that component which is
Speaker 2: very interesting.
Speaker 3: I didn't do this research myself, so I need to
Speaker 3: attribute it appropriately. The guys at Plato Asset Management did
Speaker 3: some work this story about the tech giants going and
Speaker 3: actually buying nuclear power plants because they need to be
Speaker 3: able to fuel their own extraordinary demands for power as
Speaker 3: AI kind of grows exponentially.
Speaker 1: So so what does it mean? Sorry for shareholders then
Speaker 1: what does it mean?
Speaker 3: So this is quite interesting, Like you're an Australian shareholder,
Speaker 3: you're starting to look to the resource sector. So even
Speaker 3: though we're quite concerned about lack of super exciting stimulus
Speaker 3: out of China and the downward pressure on commodity prices
Speaker 3: as a result of affair bitive stuff going on there,
Speaker 3: if there's insane demands for power and traditional energy, that's
Speaker 3: not bad for Australia as a sort of primary producer.
Speaker 2: In those areas.
Speaker 3: That's quite interesting to me, and I'm hearing that a lot,
Speaker 3: and we see that a little bit in our numbers.
Speaker 3: What I was going to say, though that piece from
Speaker 3: Plato that I'm saying that traditional energy stocks did better
Speaker 3: under Biden and renewable energy did better under Trump, which
Speaker 3: is hilarious. Right, So everything you think should happen doesn't.
Speaker 1: That is a fact. I saw that report and that
Speaker 1: the oiding gas didn't do us well under Trump mark one,
Speaker 1: then people thought it would do. That doesn't mean it
Speaker 1: won't do better under him second time round. Okay, Just
Speaker 1: in terms of just looking over at various parts, like
Speaker 1: what does it mean that the Magnificent seven mightn't be
Speaker 1: quite as good relative to the rest of the market
Speaker 1: than they have been under Trump?
Speaker 3: I think the challenge is they have run so incredibly hard.
Speaker 3: Any risk for downside is going to cause quite significant
Speaker 3: contraction potentially in those share prices. Right, They're all priced
Speaker 3: for absolute perfection, and so that there's always downside risk
Speaker 3: for those guys. There's I think, given how the major
Speaker 3: appointments are being made currently, and they're happening in real time, right,
Speaker 3: you and I are getting updated by the hour. Who's
Speaker 3: in charge of what, who's in charge of what, and
Speaker 3: what they think and how they do stuff That is
Speaker 3: that will probably take some time to play out. So
Speaker 3: I don't feel anyone needs to be chasing anything at
Speaker 3: the moment. Mostly what we see from our investors, they're
Speaker 3: taking money off the table.
Speaker 2: The one thing you didn't mention though, that I do.
Speaker 3: See our investors really interested in is crypto and particularly bitcoin.
Speaker 2: Yes, so that is coming through quite strongly.
Speaker 1: By buying bitcoin. What ETFs or so.
Speaker 3: One is micro Strategy, the company which is one hundred
Speaker 3: percent invested in bitcoin, and then the other is bitcoin ETFs,
Speaker 3: which are listed in the US. These ones specifically, they're
Speaker 3: very small trades, I must say, and it's not huge
Speaker 3: numbers of people, but they've gone from being or two
Speaker 3: weigh down the list of popping right up in the
Speaker 3: last week. And there are many bitcoiners who believe that
Speaker 3: Trump and Elon in particular are very pro crypto and
Speaker 3: therefore there's a real opportunity there.
Speaker 1: And it's up ninety percent this year. Yeah, it's been incredible.
Speaker 3: If you're not already in these things, is it the
Speaker 3: time to chase them?
Speaker 2: I don't know.
Speaker 3: For those who are already holding, it's a bit of
Speaker 3: a different story, I think.
Speaker 1: Yeah, right, okay, And I'm sure listeners are aware that
Speaker 1: Trump part of his campaign was to go propriate pro
Speaker 1: crypto and to deregulate around crypto, and most importantly to
Speaker 1: create a situation where bitcoin could be a strategic reserve
Speaker 1: asset for the US, which is a spectacular piece of
Speaker 1: information if he goes that far, and it means that
Speaker 1: bitcoin basically ranks beside gold and the US dollar inside
Speaker 1: the US administration. Now that hasn't come to pass, but
Speaker 1: he's said that. Not everything that Trump says comes to pass,
Speaker 1: of course, but it's worth anning. We'll take short break.
Speaker 1: We've got some a very good multi park question which
Speaker 1: I think will probably capture the entire segment in a
Speaker 1: moment from Deton. Hello, welcome back to the Australian's Money Puzzle.
Speaker 1: I'm James Kirby with Jemma Dale, and we are having
Speaker 1: a great discussion. I think about Trump, what it means
Speaker 1: for investors, what it means for Australian investors in particular,
Speaker 1: and I think in the early part of the show
Speaker 1: there it's worth just covering off a couple of things there,
Speaker 1: As Jemma said, the favorites of Australian investors they buy ETFs,
Speaker 1: or they buy the Big seven, the tech stocks that
Speaker 1: we are all familiar with, or they buy Berkshire Hathaway.
Speaker 1: That seems to be a Warren Buffet's Berkshire hatway. They're
Speaker 1: the leaders and they haven't changed. For what it's worth,
Speaker 1: we don't see any change so far in the numbers.
Speaker 1: People aren't betting if you like that there'll be a
Speaker 1: swing towards the traditional blue chips or oil and gas
Speaker 1: Exxon and Co. In the US just yet. The other
Speaker 1: thing is Bitcoin, which course is absolutely racing up on
Speaker 1: the back of the fact that Trump wants to make
Speaker 1: it a part of strategic reserve in the US. And
Speaker 1: Elon Musk, another pro crypto person, has become actually inside
Speaker 1: the administration of the Trump cabinet. I noticed though that
Speaker 1: he shares the job, which would suggest that he said,
Speaker 1: I can only spend so much time on this one. Donald,
Speaker 1: All right, now Declan's question bear with me here. It's
Speaker 1: in several parts. It's really interesting. In your recent episode,
Speaker 1: you said if people opt to invest in ETFs via
Speaker 1: super funds, the fees should come down. In fact, the
Speaker 1: super funds actually charge additional administration fees to access these options.
Speaker 1: My wife and I left. We will mention names here
Speaker 1: on this occasion. It's never advice, remember, it's only information.
Speaker 1: I think we can mention the name because it's the
Speaker 1: biggest super fund in Australia. My wife and I left
Speaker 1: Australian Super to set up an SMSF four years ago.
Speaker 1: And then he makes the point that Australian Super has
Speaker 1: the lowest fees, among the lowest fees out there. But
Speaker 1: even still the Australian Super fees with the member direct
Speaker 1: option would add up to more than what a cost
Speaker 1: to run our SMSF. I'll have I will have Australian
Speaker 1: Super on the line to me after this show. Don't
Speaker 1: you worry about that? Anyway? His main point is over
Speaker 1: the four years so far, our SMSF has outperformed the
Speaker 1: option that they might have taken in the big super
Speaker 1: fund by one percent perannum. And what we're doing is
Speaker 1: very simple. We invest in a few ETFs from some
Speaker 1: of the major players, all of which have a long
Speaker 1: track record and very low fees. Okay, a couple of
Speaker 1: very interesting points there. The funds, the big industry funds
Speaker 1: which dominate the super fund sector, do offer ETF options,
Speaker 1: and they all do, and they put in ETF options
Speaker 1: for the simple reason that they I would say, at
Speaker 1: least that I would say they were worried that the
Speaker 1: ETFs were so successful that they knew people would actually say, listen,
Speaker 1: I just put my money into an ETF, start an
Speaker 1: SMSF and have really low fees, so they included them
Speaker 1: in their menus. That would be all the big funds.
Speaker 1: You would expect them to have ETF options. Whether it
Speaker 1: is cheaper or not, that will depend entirely on your SMSF,
Speaker 1: the structure of it, the way you do, the nature
Speaker 1: of the accountant and order shows, etcetera that you use.
Speaker 1: But I'm no doubt it could be cheaper. I'm sure
Speaker 1: it could for somebody. What do you think of that
Speaker 1: basic observation, Gemma about the ETFs inside the big super
Speaker 1: If you had a choice of an ETF heavy SMSF
Speaker 1: or an industry fund where your focus was ETFs, would
Speaker 1: there be much difference.
Speaker 3: So the comment I would make is that an ETF
Speaker 3: is just a rapper. It would depends on what you're
Speaker 3: buying as the what the actual composition is. Right, So
Speaker 3: if you're buying the ISx two hundred and the s
Speaker 3: and P five hundred and index based ETFs like big
Speaker 3: global indices, most super funds, not all will offer an
Speaker 3: index option. So you could just go into the index
Speaker 3: option in your public office super fund, which is theoretically
Speaker 3: much cheaper and giving you exactly the same underlying exposure.
Speaker 3: So I'm very pro ETF. I'm very pro SMSF for
Speaker 3: the right person, right, they're fantastic things. A lot of
Speaker 3: the big super funds do offer index options, and they're
Speaker 3: super cheap, right, Like an ETF is five basis points
Speaker 3: if you're buying the really big indices, and an index
Speaker 3: based option inside a superfund should be very cheap because
Speaker 3: they're very cheap to run. You're not paying professionals, you're
Speaker 3: just getting it done for you. So the fair comparison
Speaker 3: is not between the member direct option and an ETF.
Speaker 3: The fair comparison is between the index option and an SMSF.
Speaker 3: With ETFs, and frankly, it depends on how much money
Speaker 3: you've got in the fund and who you're employing to
Speaker 3: run it for you and all that kind of business.
Speaker 1: Yes, yeah, and are you comparing apples with apples in
Speaker 1: terms of the waitings and the exact choice, et cetera.
Speaker 1: And the other thing. If I if I was about
Speaker 1: to call a journalist who had just read such a
Speaker 1: piece of correspondence out, I would say you're you have
Speaker 1: to take a global view, holistic view. Yeah, you're getting
Speaker 1: your insurance, You're getting your insurance cheaper through your fond
Speaker 1: and all that day would have plenty of answers on
Speaker 1: that one. But a really interesting point, Decline, And you
Speaker 1: know it comes up all the time, and I would
Speaker 1: just say also that people often say to me should
Speaker 1: I get ETFs or should I put the money into super?
Speaker 1: And I do regularly say, you do know you can
Speaker 1: get ETFs in your super. You do know that that
Speaker 1: won't you, which people don't always know. But Decline certainly
Speaker 1: knew and was able to compare the two, and in
Speaker 1: his case it was better to have an SMSF okay,
Speaker 1: thank you declin now. Final question Andy, employer contributions and
Speaker 1: yearly caps aside, is there any difference between salary sacrificing
Speaker 1: one hundred dollars a week or five two hundred being
Speaker 1: fifty two weeks at the end of the financial year
Speaker 1: and claiming it as the concessional contribution? Do I ultimately
Speaker 1: get the same tax saving. I'm just risking the game
Speaker 1: of timing the market rusus time in the market. It's
Speaker 1: tempting to do so and jump in late answer, there's not.
Speaker 3: A huge difference, Like it's there's not a huge difference.
Speaker 3: I mean it's really part of it is discipline, Like
Speaker 3: are you going to put.
Speaker 1: When you say that's not a huge difference, do you
Speaker 1: mean history would suggest.
Speaker 3: History would suggest, Well, I think it's more behavioral than
Speaker 3: anything else. Are you going to make sure you put
Speaker 3: the one hundred dollars aside? You know, if you get paid weekly,
Speaker 3: whatever it is, if it's monthly, whatever, are you going
Speaker 3: to put the money aside and have it at the
Speaker 3: end of the year and have the discipline to do
Speaker 3: it and not accidentally miss the cut off date for
Speaker 3: your super fund or whatever. Because just these little things
Speaker 3: that trip you up.
Speaker 1: But what about dollar cost averaging?
Speaker 3: Yeah, so dollar cost averaging is very effective, but I
Speaker 3: think to an extent it is mostly the discipline of
Speaker 3: making sure you do it. But if you're putting it
Speaker 3: in a mortgage offset account for the full year and
Speaker 3: then putting it in with a deduction, maybe that's very effective.
Speaker 2: You I think there's a few variable.
Speaker 1: Maybe that's very effective if you have a mortgage like that.
Speaker 2: But don't talk to yourself, don't.
Speaker 1: Touch yourself, and it's not advice Andy, And by the way,
Speaker 1: just in case starcat averaging, folks, you do know what
Speaker 1: this is. I hope. It's the theory that very regular
Speaker 1: set identical payments paid through the season, monthly or weekly
Speaker 1: or whatever, over a long period of time, you will
Speaker 1: be better off because you don't get caught in market
Speaker 1: crashes or downturns. So on average, you pay about the
Speaker 1: right price all the time. So for the times you
Speaker 1: pay too much when the market's hot, you also buy
Speaker 1: in the low times and it strips out the human
Speaker 1: tendency to try and grab a bargain, which is pretty good.
Speaker 3: Again, that's behavioral, right, Like you can look at it
Speaker 3: over a different times frames and it works.
Speaker 1: This is your thing, right, investor behavior, your head of
Speaker 1: investor behavior.
Speaker 3: It depends, Like there are times when it's a terrible idea.
Speaker 3: If you're just dollar cost averaging up, you might as
Speaker 3: well just board at the beginning and off you go.
Speaker 3: But it depends if you have also a lump some
Speaker 3: to work with. If you don't have a lump sum
Speaker 3: to work with, it's irrelevant, isn't it. You have to
Speaker 3: dolar cost average because that's.
Speaker 2: Your only way of getting in.
Speaker 3: If you have a lump sum and you're nervous about
Speaker 3: timing the market, then it just takes away the anxiety.
Speaker 3: So again I think the maths is less important than
Speaker 3: the behavioral element, which is just making sure you get in.
Speaker 1: The healthy habit is it of investing in that manner.
Speaker 1: I think it's very good. And I must say that
Speaker 1: doesn't mean I do it myself. I do it, of course,
Speaker 1: because I do it in my super, because my super
Speaker 1: was clipped off my salary. So to that extent, the
Speaker 1: contributions are of cost averaging, but the distribution it's human
Speaker 1: to look for the cheap opportunities. But it's quite strong, folks,
Speaker 1: it's really good dollar cost averaging. If you want to
Speaker 1: know more about it, writing and let us know and
Speaker 1: we will have a show on it. Look, it was
Speaker 1: always a strong theory. There was a period when it
Speaker 1: went out of fashion, and it went out of fashion
Speaker 1: during the ghastly period of two o seven to two
Speaker 1: oh nine where the market's felt fifty percent in a
Speaker 1: long slow way over two years, and the unfortunate fund
Speaker 1: managers who stood on stage and propounded on dollar cost averaging,
Speaker 1: they had a bit of answering to do to people
Speaker 1: who said, well, I've been following your idea and the
Speaker 1: market just keeps going down and we'd get periods like
Speaker 1: that again. But his long, we just.
Speaker 2: Brought all the way down. That's awesome. It's better than
Speaker 2: bang all the way up.
Speaker 1: As long as you kept going right, as long as yeah,
Speaker 1: as long as you didn't say, ah out, I'm not
Speaker 1: doing this anymore and you missed the turn. You got
Speaker 1: to keep doing it. You can't fool around with this
Speaker 1: dollar cost averaging. You have to stick to it. It's
Speaker 1: very interesting. Let us know if you want to hear
Speaker 1: more about it. Okay, we're running out of time. Jemmy
Speaker 1: Dale knab trade ahead of investor Behavior. Thank you very
Speaker 1: much for coming on the show. Great to have you.
Speaker 2: Thank you so much. It's always fun.
Speaker 1: It's always fun. Thank you, and let's have some emails, folks.
Speaker 1: The email is the Money Puzzle at the Australian dot
Speaker 1: com dotu talk to you soon.