Self‑Managed Super Funds (SMSFs) have become one of the most popular ways Australians manage their retirement savings. With greater control comes greater responsibility: SMSF trustees must select, monitor and manage investments that support the long‑term goals of the fund.
For many SMSF investors, the key objective is not simply chasing the highest possible returns. Instead, the focus is usually on achieving steady growth while controlling downside risk. This becomes especially important as members approach retirement, when protecting capital and generating reliable returns become central priorities.
Finding investments that balance risk and return is therefore one of the most important tasks for SMSF trustees.
Why Risk Management Matters in SMSF Portfolios
Unlike investors in large managed super funds, SMSF trustees make their own investment decisions. This flexibility can be powerful, but it also requires discipline and a structured investment process.
Markets can be volatile. Economic cycles, interest rates, geopolitical events and sector‑specific issues can all affect share prices. Without a careful approach to risk management, portfolios may experience large drawdowns that take years to recover from.
For this reason, many SMSF investors prioritise companies or assets that demonstrate:
• consistent historical returns
• controlled volatility
• resilience during market downturns
• strong risk‑adjusted performance
Using data‑driven tools to screen investments can help identify companies that exhibit these characteristics.
Using Stock Screeners to Identify Potential Investments
Modern investment tools allow investors to filter thousands of global stocks in seconds. Instead of manually analysing each company, investors can use quantitative metrics to quickly narrow the universe of potential candidates.
StockLenz is one such screening platform that enables investors to evaluate investments using both return and risk metrics. By applying targeted filters, SMSF investors can identify companies that historically demonstrate strong performance characteristics.
Below are several example filter combinations that can help SMSF investors find investments worth further research.
Filter Example 1: Risk‑Adjusted Return Strategy
This filter focuses on companies that historically delivered strong returns relative to the level of risk taken.
EXAMPLE 1
Criteria:
Expected Return: greater than 10%
Sharpe Ratio: greater than 1
Volatility of Returns: less than 25%
Beta: less than 1
(click to watch the step by step process to set up the filters in StockLenz)
Why this helps:
The Sharpe ratio measures how much return an investment produces for each unit of risk. Investments with higher Sharpe ratios tend to provide better compensation for the volatility experienced by investors.
Combining strong expected return with controlled volatility and lower beta can help highlight companies that historically produced efficient risk‑adjusted performance.
Filter Example 2: Consistent Growth Strategy
Many SMSF investors prefer companies that demonstrate stable performance over several years rather than short periods of rapid growth.
Example criteria:
CAGR (3 years): greater than 12%
Expected Return: greater than 10%
Volatility of Returns: less than 30%
(click to watch the step by step process to set up the filters in StockLenz)
Why this helps:
The compound annual growth rate (CAGR) shows how consistently an investment has grown over time. Screening for companies with strong multi‑year growth while controlling volatility can help identify investments that may offer more predictable long‑term performance.
Filter Example 3: Downside Protection Strategy
Managing downside risk is particularly important for retirement portfolios. Large losses can take many years to recover from, which is why drawdown analysis can be valuable.
Example criteria:
Expected return: min 20%
Maximum Drawdown (MDD): less than 25%
Volatility of Returns: less than 25%
Beta: less than 1
(click to watch the step by step process to set up the filters in StockLenz)
Why this helps:
Maximum drawdown measures the largest peak‑to‑trough decline experienced historically. Recovery time shows how long it took for the investment to return to previous highs.
Companies that historically experienced smaller drawdowns and recovered faster can help reduce the long‑term impact of market downturns on a portfolio.
Diversification Remains Important
Even when focusing on lower‑risk investments, diversification remains an essential component of SMSF portfolio construction.
Spreading investments across industries, regions and asset classes helps reduce concentration risk. A well‑diversified SMSF portfolio may include Australian equities, international stocks, ETFs and other asset classes that align with the fund’s investment strategy.
Combining diversification with data‑driven screening can help create a more resilient portfolio.
Screening Is Only the First Step
While screening tools can significantly improve the investment process, they should not replace deeper research.
Once a shortlist of companies is identified, investors should still examine:
👉 the company’s business model
👉 competitive advantages
👉 financial strength
👉 management quality
👉 long‑term industry outlook
This qualitative analysis ensures that investments align with the long‑term objectives and risk tolerance of the SMSF.
Conclusion
Managing an SMSF successfully requires a disciplined and structured investment approach. By focusing on investments that demonstrate strong expected returns, controlled volatility and attractive risk‑adjusted performance, trustees can improve the stability of their portfolios.
Tools such as StockLenz allow investors to quickly identify companies that meet these criteria, helping them focus their research on higher‑quality opportunities.
For many SMSF investors, combining quantitative screening with thoughtful analysis can be a powerful way to build a more resilient portfolio capable of delivering sustainable long‑term returns.
Find Your Own SMSF Investments
Install StockLenz today and run a search – it takes just seconds, freeing up your time to focus on even deeper research and comparisons.
You can also save your favourites to your Diversiview account for further analysis.
NOTE: This article is not investment advice and does not constitute a recommendation to invest in any of the securities mentioned above. StockLenz is a quant driven research tool and the results will differ based on the data available, your filters and other indicators such as risk-free rates of return at the time of search. Please do your own research and/or speak with your financial advisor before making changes to your portfolio. Past performance does not guarantee future performance, and all investments carry a level of risk.
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