SMSFs not favouring property but opting for cash and equities
Self-Managed Superannuation Funds (SMSFs) have on average only seven per cent of their total holdings in residential property, regardless of the size of the fund, hosing down claims that SMSFs are moving into that sector as investors.
Rather SMSFs have continued to be typically weighted towards cash, equities and managed funds, with those three sectors accounting for 73 per cent of the average SMSF portfolio mix.
The portfolio make-up of SMSFs was confirmed as part of the research conducted and released by the Financial Services Council and UBS in their joint State of the Industry Report, released yesterday. The research surveyed the demographics and portfolio holdings of six hundred SMSF holders nationwide during early October.
Of those SMSF funds that were invested in property 14 per cent reported that were leveraged into the sector compared with 10 per cent who were leveraged into equities.
The report stated that cash was the predominant asset held by SMSFs representing 35 per cent of a typical portfolio while Australian equities made up 23 per cent of the portfolio and managed funds 15 per cent with direct property at seven per cent and other forms of property — such as listed and direct commercial — accounting for four per cent each.
The report stated portfolio allocations were skewed towards cash, Australian equities and managed funds when balances were lower and moved towards higher investments in trusts and property as fund balances increased.
"That said, however, residential property and more esoteric investments such as valuable artworks rarely form more than five per cent of the investment mix regardless of the size of the SMSF," according to the report.
The report also stated that there was "very little foreign investments of any kind held in SMSFs across the board, which is noticeably different to the larger Australian Prudential Regulation Authority (APRA) regulated industry and retail funds" but that 15 per cent of SMSF fund holders considering diversification were looking at international equities.
The report also stated that 12 per cent of SMSF fund holders were considering diversifying into shares in infrastructure companies and that with $546.9 billion invested in SMSFs there was a potential pool of $54.69 billion available for investment in companies or equity providers in this sector.
AUTHOR
Jason Spits
Recommended for you
Infrastructure assets are well-positioned to hedge against global uncertainty and can enhance the diversification of traditional portfolios with their evergreen characteristics, an investment chief believes.
Volatility in US markets means currency is becoming a critical decision factor in Australian investors’ ETF selection this year.
Clime Investment Management is overhauling the selection process for its APLs, with managing director Michael Baragwanath describing the threat of a product failure affecting clients as “pure nightmare fuel”.
Global X will expand its ETF range of exchange-traded funds next month with a low-cost Australian equity product as it chases ambitions of becoming a top issuer of ETFs in Australia.
