I am curious as to whether any other SMSF investors, especially in Pension phase, have an investment bias toward highly franked stocks.
I will outline my thinking, and invite opinions, disagreement especially welcome.
It seems to me that there is two main areas where an edge can be obtained.
1) In the instance of low tax rate, and I will use the example of 0% for Super Pensions, the imputation Credits are fully refunded. This obviously gives a higher rate of return than investors who pay higher rates of tax.
( Advantage also for 15% accumulation phase super)
2) Narrows the Universe of Stock selection/research..this means better research
I dont focus on high Dividend payment as such, in fact I prefer if the Co, reinvests at a high ROR...the edge comes soley from the Imputation Credit refund percentage.
I prefer to follow a core/satellite strategy for my SMSF, as it simplifies the process and reduces time demands.
I do not exclude capital gains by any means, as they are also non-taxed, and a gain is a gain.
I do spend time looking for speccy stocks for big gains, but feel this excursion has been taking up too much time, and has obvious higher risk.
So I am considering reverting slightly more to my previous strategy.
So to summarise, a higher percentage of stocks that pay FF divs, high ROE, consistent ROR over time