Managed funds investment supplants home loans

While common convention holds that Australians have most of their wealth tied up in housing, new research conducted by Roy Morgan Research has revealed that managed funds are a far more dominant investment choice.

The research — Superannuation and Wealth Management in Australia — released this week reveals that with a total dollar value of nearly $1.4 trillion, managed funds represent more than twice the value of owner occupied home loans.

Importantly, however, superannuation represents the major conduit via which Australians access managed funds.

However, the same research revealed that retirement products such as superannuation, pensions and annuities currently account for 29.6 per cent of household net wealth, up from 25.4 per cent in 2004.

It said this gain in share had been mainly at the expense of equity in owner occupied housing, which had declined from 46.5 per cent to 43.2 per cent of net wealth over the same period.

Equally importantly, the Roy Morgan research points to the fact that the top 20 per cent of wealth management customers account for just under 70 per cent of the value in the market, with the best performers in this group being self-managed super funds.

It said in contrast, the bottom 60 per cent accounted for only 11.8 per cent of the total value, with industry funds dominating this lower end.