Platforms to increase SMSF global share allocations
It will be advances in platforms that will help self-managed superannuation fund (SMSF) allocate more to international shares, according to UBS Asset Management.
Speaking at the launch of the annual UBS and Financial Services Council (FSC) ‘State of the Industry’ report, UBS managing director for Australia and New Zealand, Bryce Doherty said while they originally thought exchange traded funds (ETFs) would pave the way for more SMSF allocation to international shares, it would more likely be technology platform advances.
The report found that international share allocation in SMSFs was at 0.6 per cent, compared to 21.8 per cent in Australian Prudential Regulation Authority (APRA)-regulated super funds, and 26.7 per cent for MySuper products.
“There are a lot of the advances that are happening in tech right now, like SMAs [separately managed accounts], that I think will lead to more international share allocation,” Doherty said.
“We thought it was going to be ETFs to have a big uptick in SMSFs to get international equities but I think that as some of the platforms are able to hold direct offshore equities that’s possibly more where we’ll see more SMSF members get right into holding offshore assets seeing as that’s how they’re holding their local ones.”
Doherty noted that there would be more opportunity for alternative assets to be available to SMSF members over the next five to 10 years thanks to the maturity of the overall system and time horizons.
“With other types of asset structures where investors will be tied up for seven to 10 years, people understand that ‘well I’ll be invested for 40 to 50 years I can start taking a percentage of my contributions and put it into those types of things’,” he said.
“There’s a lot of demand for infrastructure spending to happen here in Australia. What you see happened here in the last two to three years is that anything that has been available for industry funds to bid on has been bid to very very low returns because the demand and money ready to go into those assets is far bigger than the assets available.
“A number of the funds look offshore for this. So you’re more likely to see them go international.”
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