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: Budget reduces concessional cap to $25,000

"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

CFS targets Millennials

Colonial First State (CFS) has added a new superannuation investment option designed for people born in the 21st century. The First Choice Lifestage 2...more

Praemium launches SMA solution for Futuro

Publicly-listed investment administration software provider, Praemium, has announced the launch of a new managed accounts solution for the Futuro deal...more

What’s Next for Oil and Why OPEC Still Matters

OPEC didn’t change their production guidance at their June 2 meeting. Yet rather than focus on what OPEC said, we believe investors should pay atten...more

Author

Comments

Add new comment