Home bias putting SMSFs at risk

Most self-managed super funds (SMSFs) and retirement investors are failing to realise the risks of predominantly investing in Australian assets, according to FinaMetrica.

SMSF investors invested only 0.4 per cent or $2.4 billion in international shares.

But standing at $176.2 billion, Australian shares made up 32 per cent of all SMSF assets, and cash and term deposits stood at $156.7 billion, which is 28 per cent of all SMSF assets.

Related News: New lost super limits risks losing insurance

"SMSFs are continuing to focus their investment efforts in Australia, with a huge bias towards local assets almost to the total exclusion of those offshore," co-founder of FinaMetrica Paul Resnik said.

"This is exposing SMSFs to significant investment risks and they should urgently be reviewing their asset allocations before these risks are crystallised. When Australian markets correct — and they will — SMSFs will be hard hit given the sheer size of their exposure to Australian shares."

A recent Investment Trends/Morningstar report on the importance of advice found the biggest barrier to obtaining more international exposure in a portfolio for investors is lack of knowledge of overseas markets, with 42 per cent of the 743 respondents citing this reason.

SMSFs allotted record amounts to Australian property with $69.9 billion invested in non-residential property as at September 30 and a further $21.1 billion in residential real estate. This represents a total of 16 per cent of all SMSF investments.




Related Content

Calls to relax fixed income constraints

QIC is calling for the relaxation of benchmark constraints on fixed income portfolios, saying that investors could otherwise be paying to lose money. ...more

CFA designation needs higher recognition by capital markets

Industry professionalism across the adoption of the Chartered Financial Analyst (CFA) designation needs a more consistent definition and higher recogn...more

Futuro restructures its team

Independently-owned, non-aligned ASF licensee, Futuro Financial Services, has announced it has completed the restructure of both its business and the ...more

Author

Comments

Add new comment