International equities

I currently hold approximately 36% of my SMSF in International Equities with 3 asset managers (some of which are hedged back to AUD).

All 3 managers investments have performed quite well since I invested in 2009, however as each manager now represents around 12% of my total portfolio, I want to reduce my exposure to each of them. I would be comfortable with an allocation of 8%.

I will most likely allocate the funds returned to a liquid ETF.

If I make a partial withdrawal in each fund I will incur CGT which I am hesitant to take.

I’d be interested in your thoughts on how best to approach this re-weighting.

A: If you are reluctant to pay the CGT, then the only way to re-weight is to invest new funds (contributions, dividend and investment income etc) into the ETF. It may take a long time to achieve the re-weighting.


With the CGT, provided you have held the funds for more than 12 months, you will only pay tax on the gain at an effective rate of 10%.


Bottom line – if each of the 3 fund managers was performing (that is, relative to their benchmark), I would maintain the exposure at 12%. I don’t quite follow why you are uncomfortable about this. If on the other hand one or more of the funds was underperforming (again, relative to their benchmark), redeem the units, pay the CGT and re-invest in an ETF.



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