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66 wealthcreator.com.au  SEPTEMBER/OCTOBER 2010

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SEPTEMBER/OCTOBER 2010 wealthcreator.co

“No plans tosell any stake toanybody, that’sall I can say atthis stage.”

Richard Branson hoses

down rumors of selling his

company’s stake in Virgin

Blue to Air New Zealand

$660 million– amount US media

investment group

Providence Equity Partners

paid to buy an Australian-

based private education

business.

$36 billion 

– amount of money

invested from Japan to

 Australia in 2008, up 50%

on 2006 levels.

$300,000new land

tax-free threshold for South

 Australia from July 1, up

from previous $110,000.

£22.4 million A self-portrait by Edouard

Manet sold at Sotheby’s

auction house in London

last month, setting a new

record for a work by the

master impressionist.

• Investors with “exotic” assets in their

self-managed super funds (SMSFs)

should pay close attention to the Cooper

Review.

One of the most controversial

recommendations to come out of the

Cooper Review could see collectables

banned out of SMSFs. Under this

proposal investors will have five years

to liquidate or move their assets out

of their funds. With a rise of more than

400,000 SMSFs, there has also been

a rise in exotic asset classes such as

stamp collections, race horses, jewellery,

antiques, wine cellars, and classic cars.

Under the proposed Cooper Review

bans will prohibit such items and

investors will have five years to either

sell or shift these items. Offenders whobreach the rules may be obliged to take

mandatory education lessons on what is

allowable in self-managed funds and the

 Australian Taxation Office (ATO) will be in

a position to hand out fines.

But as head of the review, Jeremy

Cooper said the focus of SMSFs should

be on investing for retirement savings

rather than related party transactions,

collectables and leverage.

However, investors can be assured

that there are alternatives and their

assets would not be required to be

sold – just shifted. This can be done by

moving the assets to a small super fund

that has its own trustee and is regulated

by the Australian Prudential Regulation

 Authority (ARPA) rather than the ATO.

Industries affected by the decision

have reacted furiously. The Australian

Numismatic Dealers Association (ANDA)

vice president Robert Jackman said:

“Although the Cooper report describes

collectables as not material to the trillion

dollar superannuation industry, these

recommendations will nevertheless have

a serious impact on the art, numismatic

and other collectable industries. The

ramifications will be felt well beyond

SMSF trustees alone.” He asked the

Government to consider the significant

losses, which could happen if investors

are forced to flood a small market with all

their assets in the five-year time frame,

and believes SMSFs portfolios will beseverely damaged.

SMSFs have grown in popularity

because of control and flexibility

according to the Institute of Chartered

 Accountants’ Liz Westover.

“People lost confidence in their

investment returns and felt they could do

better themselves,” said Westover.

SMSFs are subject to audits every year

but the Cooper review found that more

than 50% of these auditors do fewer

than five audits a year. This has led to

some suggestion that there might be

some benefits in consolidation within the

service market by having a smaller super

fund.

Invest & Trade

Too exotic for self-managed super

“The ramifcationswill be elt wellbeyond SMSFtrustees alone”

“The ocus oSMSFs should beon investing orretirementsavings”

Chinese slippinginto fifth

• China’s $300 billion sovereign

fund (SWF) recorded a double-d

on overseas investments in 200

China Investment Corporation (C

a profit of 11.7% on $58 billion

overseas last year, according to

 Xinhua news agency, which cited

fund’s annual report. The 80% s

income brought the funds total t

billion, making it the fifth largest

world.

 This figure is a turnaround from

when overseas investments fell

 The net profits for 2009 reached

than $41.5 billion – almost doub

the $23.1 billion profit made in 2

funds return was thanks to an a

of overseas investments and hig

assets.

 A report from the CIC said tha

of its overseas portfolio was inve

equities last year, 26% in fixed in

securities, 32% held in cash and

alternative investments. North Awas the top destination for CIC’s

investments accounting to 43.9%

total investments. The Asia-Paci

attracted 28.4% of the total inve

with Europe at 20.5% Latin Ame

6.3% and Africa at 0.9%.

 According to a filing with the U

securities regulator, the fund he

with $9.6 billion in dozens of US

companies such as Coca-Cola,

and Morgan Stanley.

Regardless of a strong 2009,

predicted a challenging year ahe

the volatility in global markets. In

June of this year the fund faced

10% resulting from market volat

the European sovereign debt cri

China’s SWF is still looking to

overseas investments and has e

on a global recruitment drive.

“Due to the needs for busines

development, CIC will start a new

recruiting,” the Beijing-based fun

on its website. “We seek highly

professionals worldwide to join u

“The things thatthe Miami Heatfranchise havedone to be ableto free upcap space andto be able toput themselvesin a position thissummer to haveall three of us, itwas hard to turndown.”

LeBron James discusses his

trade to Miami Heat which will

see him play alongside Dwayne

Wade and Chris Bosh

 Above: Art inexhibition atMiArt ArtNow,internationalexhibition of modern andcontemporaryart March 27,2010 in Milan,Italy