SMSFs asset allocation too risky: Finametrica
Self-managed super funds (SMSFs) are exposing their portfolios to a high investment risk, with a shift towards growth assets, co-founder of Finametrica, Paul Resnik said.
In the June 2015 quarter, SMSFs allocated one third of all their assets ($187.1 billion) to Australian shares, with just $1.8 billion invested in international shares.
The numbers highlight a "risky allocation" of assets which was dominated by growth assets like local property and shares — a trend Resnik maintains is "potentially out of line" with the risk tolerance of most SMSF trustees.
"SMSFs need to ensure they achieve greater asset diversity with their portfolios and a greater awareness of their ability to tolerate investment risk," Resnik said.
"SMSFs would be prudent to consider how they can diminish their Australian equities risk and rebalance their portfolios to incorporate greater offshore diversification and an overall lesser exposure to equities."
Resnik affirmed that many SMSFs are in need of good investment advice to help them be ready for market volatility.
"If the Australian dollar continues to fall, investors could see even greater gains from holding unhedged offshore investments, whether bonds, shares or alternative assets," Resnik said.
"By better understanding how financial markets work, and the impact of asset allocation on portfolio behaviour, SMSFs can better prepare for market downturns when they happen."
Recommended for you
Former Platinum co-founder James Simpson will take up a non-executive role at Income Asset Management as two directors retire.
Bell Financial Group has announced a 44 per cent decline in half-year net profit after tax but record funds under advice as it transitions into a diverse wealth management business.
Having predicted three ETF trends for Australia at the start of this year, State Street has shared how these are tracking and whether Australia will successfully reach US$30 billion ETF inflows for 2025.
Magellan fund manager Nikki Thomas is to depart next month as the firm reviews its range of global equity funds and transitions her High Conviction fund.
