Expert Analysis of the RBA's rate decision

FundMonitors.com

July 2025

Following this Tuesday's decision by the Reserve Bank of Australia to keep the cash rate on hold at 3.85%, Chris Gosselin, CEO of FundMonitors.com, is joined once again by Nicholas Chaplin, Director and Portfolio Manager at Seed Funds Management, and Renny Ellis, Director & Head of Portfolio Management at Arculus Funds Management - both of whom correctly anticipated the outcome in last week's discussion, going against the grain of most economists and the money market.

In its post-meeting statement, the RBA reiterated that 'the outlook remains uncertain' - a phrase that has now appeared in every statement since late last year - and reaffirmed that 'inflation and full employment remain the board's priority.'

With that in mind, we're here to unpack the RBA's decision, the market's response, and what might lie ahead for monetary policy in the second half of the year.

If you haven't yet watched the previous video, where Nicholas and Renny shared their thoughts on what the RBA might do this week, click here to view it.

Do You Need an SMSF?

Marcus Today

July 2025

When visiting a financial planner, it is almost inevitable that they will advise you to set up an SMSF. If you take control, they get control. But it is not for everyone.

As of 30 June 2024, there were over 625,000 SMSFs (an increase of 4.5% from June 2023). 1,1987,293 SMSF members hold $990 billion in assets. Over the past five years, the number of SMSFs has grown by 11%.

Where Do You Sit in the SMSF Hierarchy?

Generally speaking it is about control. It is about you (or your financial planner) being able to control your investments as well as do some 'strategic tax planning'.

Read below to work out whether you need one, why you would need one, why you shouldn't open one and why you should.

The Main Disadvantages of an SMSF

The main disadvantages of an SMSF include cost, complexity and the compliance burden. It may sound clever and simple, and be sold as such, but compare the 'fuss' and administration involved in an SMSF and compare it to the administration and lack of fuss involved if you simply sit in a "set and forget" big industry or retail super fund. There is no comparison. An SMSF is cost and effort.

Rather laughably, as many of you come into retirement, you will (as you should) visit a financial planner, come away with an SMSF, and, if you don't hand your financial future and all the investment decisions to the financial planner, who charges you X percent of your investable assets every year (which seems inequitable - the more you have the more you pay for the same effort?), you could, just as you are supposed to relax and enjoy life, find yourself burdened with financial administration, extra accounting costs, and, despite being wholly unqualified, find yourself with the responsibility of being your own fund manager, which, it has to be said, can be divisive for a marriage when you cock it up! (Thank goodness for the guidance of the Marcus Today newsletter. We have been saving marriages for 27 years.)

DO I NEED AN SMSF?

The main reasons NOT to set up an SMSF include:

• You don't have much money in Super. Generally speaking, if your fund balance is less than $500,000, you need to think about whether it is worth it on a cost-to-benefit basis. And if your balance is $300,000 or less, it probably is too small to bother.
• You do not understand investments and are not interested in learning. Marcus Today targets people who are interested in investment, are willing to learn, and do see it as a fabulous hobby in retirement rather than a burdensome responsibility that they hate. If you simply have no interest, an SMSF is not for you. Unless, of course, you are prepared to pay someone else to manage it (for a fee).
• If you are happy with your current set-and-forget solution. If you really aren't interested in the whole thing (and there is a lot of value in not caring at all about finance every morning), there is nothing wrong with keeping all the money and responsibility with one of the major super fund administrators. These days, their websites are pretty fabulous, allowing you to pull some levers if you want to cash in and out, and even trade individual stocks and exchange-traded funds (the flexibility varies between providers). The big ones are generally the best when it comes to flexibility and functionality, because they have spent the money building their websites to compete with SMSFs, which means allowing you to make investment choices within their structure. So if you are happy with an average return (which is fine as long as you don't catch a global financial crisis in the middle of your retirement) there is nothing wrong with trusting the big funds. Their returns are very similar to each other, the administration and customer service (of the big ones) is generally excellent, the flexibility to direct your own investments that they now provide you through their websites is much better, and it is all available to you...if only you could find your login...on a website 24/7. It also takes away the responsibility from one particular party in a marriage/partnership, which, no joke, can be very divisive when you really don't know what you're doing and get it wrong. And a word to the wise, if the study door is locked, and your partner's mood is not good, chances are they are cocking it all up and hating it. A set-and-forget solution might be better! Sidenote - The most dangerous combination is when one of you is stubborn and arrogant enough to think you know what you are doing, but the results are bad, and the communication is poor. In which case, you may need an "Intervention" and a "Return to a Big Industry or Super Fund" (!)

What Are the Main Reasons for Setting Up an SMSF?

To allow a financial planner to take control of your investments.

• I have always had a bit of a problem with this (of course I would). Most Financial Planning education covers taxation, superannuation and retirement planning, ethics and professional standards, the financial advice regulatory environment, insurance, estate planning, wills, aged care, business succession, and other very valuable subjects which deliver tremendous value when tailored to a client. But, within all that there will be a small subject called "Investment" which, in my experience, teaches, can you believe it, "Modern Portfolio Theory" which I have to say, is not modern, is old-fashioned, out of date, brainless, and guaranteed to produce average returns and is more focused on risk profiling a client and stuffing them into an appropriately bland list of managed funds all of which charge management fees on top of the financial planning fees and the platform fees which you will doubtless end up on. As a stockbroker of 40 years I would say this of course, so apologies for that, and let's be honest, many financial planners' investment solutions, whilst bland and boring, are low risk, low volatility, and defensible. I obviously think you can do investment better and pay less fees. As do all Marcus Today members, or they wouldn't be subscribing. The bottom line is that in the eyes of an active investor like myself and our members, investing through a financial planner puts you into a sausage machine that is more focused on their risk than your return. If you are sitting at Macquarie with 20 managed funds and some clever advisor who puts you into terribly smart (unnecessary) asset classes like private equity, but drives a better car than you, then you are feeding the Golden River of fees that supports the finance industry. Just saying.

To allow you much more flexibility on what you invest in.

• Some asset classes are not available in industry or retail super funds. Super funds these days are used to buy businesses, direct commercial or residential property (buying business premises via super is a big one), collectables, art, and even crypto. You can't do that in AustralianSuper.

You have enough money to need tax minimisation strategies that deliver more benefit than it costs to implement them.

•  SMSFs give more control over timing capital gains, contributions, pensions, and franking credits. You can tailor tax strategies around retirement timing and income needs. Basically, if you have a lot of money, businesses, family trusts, numerous assets and consequently complex tax affairs, you already have an SMSF. And you won't be reading this article.
• Sidenote - Some financial planners will tell you that you need an SMSF to maximise the collection of franking credits. They have their reasons for that (they take their fees out of your franking credit refund each year), but I'm not sure you should ever chase franking credits and see it as a poor excuse for setting up an SMSF - but that's for another day.

Succession

• A much better reason is that SMSFs allow things like specific binding death benefit nominations and structures to retain assets in the fund for beneficiaries, including multi-generational strategies. It allows you to control who gets what and how. If you have complex family dynamics and a lot of money to distribute, which can be controversial, an industry or retail fund might not cut it.

Business owners

• SMSFs allow small business owners to own commercial premises through the SMSF and lease them back to the business at arm's length terms, which can be good for cash flow and succession. If you are running a business and paying rent, why not pay it into your own SMSF? And it doesn't count as part of your concessional contributions.

To look after the Family

• Don't do this unless you really know what you're doing, but if you are confident in your investment capabilities and are, or have, consistently beaten the averages, whilst other family members don't pay attention to their super or are paying attention but making mistakes, then an SMSF can have up to 6 members allowing a family to pull their super into one fund. Your family, of course, has to trust the management. Might be a bit of an ask - "Trust" is required. Pooling Super responsibilities into one fund obviously lowers and simplifies administration and costs. It can also pull a family together. Generally speaking, as long as family members are interested and interested in learning, everyone's investment intelligence is lifted to the level of the most intelligent, which can be quite 'bonding' and of long-term benefit to younger members - knowledge is passed on.

WHAT DO SMSFs INVEST IN?

Here is a table of asset allocation of SMSFs by asset class, depending on the size of the SMSF, using percentages. If you were to say the bigger the fund, the more sophisticated the strategy, then a few things become obvious. Notice that small funds (under $500K) have over 30% cash. Very small funds have 48%. The smaller the balance, the more chicken the investing. Note also that small funds are much bigger into crypto. Crypto is obviously the main reason some people set up an SMSF (with not a lot of money). Notice also, the bigger the fund, the more likely they are to own their business premises. One thing that mildly surprises me here is the low asset allocation to overseas equities (although using Australian-listed ETFs to invest in international stocks would appear as domestic listed shares, so maybe no surprise).

WHO HAS AN SMSF?

75% of people with an SMSF are over 50. 3.3% are under 35.

SO, DO YOU NEED AN SMSF?

Bottom line - ask yourself.

• Do you have a lot of money?
• Are you financially literate?
• Are you interested in investment?
• Are you prepared to involve yourself (it's time-consuming)?
• Can you see it as a hobby?
• Are you willing to learn?
• Are you prepared to do the administration?

Don't set up an SMSF if:

• You don't have much money in your super.
• You don't have a complex financial setup (no business, one family home, only concerned with your own retirement).
• You have no interest in investment at all.
• Just because a financial planner wants you to. It's your choice. Do not be bullied or made to feel stupid. You need to see real financial and lifestyle benefits and have them explained. Even if you are wealthy, it is not an inevitability. Some very wealthy people are smart enough to keep it simple and have a nice stress stress-free life.

UNNECESSARY SMSFs

ASIC is currently reviewing "SMSF establishment advice to retail clients" to "evaluate the suitability of SMSF establishment advice, ensuring it aligns with client needs and is in their best interests. SMSFs are suitable for some, but not all, clients. Setting up an SMSF is a significant step and may have serious consequences for your client, their retirement savings and their insurance cover".

Clearly ASIC is concerned that some financial advisers set up SMSFs for their own benefit rather than the client's. "ASIC has warned that it continues to see too many examples where SMSF advice leads to poor, if not devastating, outcomes for clients. Findings from ASIC's review are expected to be released in the second half of 2025".

So, if you are a SNW investor (small net worth - I just made that up), don't take it for granted that you should set up an SMSF just because your accountant or the financial planner you have just seen for the first time says you should. Unnecessary SMSFs are clearly a bit of an issue, enough to stir up ASIC anyway.

DISCLAIMER: This content is for general information purposes only and does not constitute personal financial advice. Please consider your own circumstances or seek professional advice before making investment decisions.

Funds operated by this manager:

Marcus Today Equity Income SMA , Marcus Today Growth SMA

Australian Secure Capital Fund - Market Update

Australian Secure Capital Fund

June 2025

National housing values rose another 0.5% in May, bringing total growth to 1.7% so far in 2025, with every capital city in positive territory.

The market appears to be responding to recent and anticipated interest rate cuts, with auction clearance rates also picking up post-RBA's May meeting. While annual growth has softened to 3.3%, even previously flatlining cities like Melbourne and Canberra are edging back into growth.

Regionally, SA is leading the charge, up 5.8% year-to-date, while higher-end property segments in Sydney and Canberra are now outpacing entry-level growth.

With values rising across capital cities and regions, many investors are keeping a close eye on how interest rates and housing supply may influence the months ahead.

Property Values as at 31st of May 2025

Median Dwelling Values as at 31st of May 2025

June Edition

Funds operated by this manager:

ASCF Select Income Fund , ASCF High Yield Fund , ASCF Premium Capital Fund , ASCF Private Fund