SMSF cash holdings up, shares down

Self-managed super funds have increased their cash and fixed interest holdings and significantly reduced their Australian share exposure, according to a Multiport survey of 1600 of the funds they administer, representing around $1.3 billion.

Cash holdings increased nearly 2 per cent in the September quarter while shares dropped close to 3 per cent in the quarter, due to a combination of dividends being paid out and not being reinvested and a decrease in the share market over the quarter, Multiport found.

Fixed interest holdings also increased close to 2 per cent and property was up slightly, while there was a slight drop in international shares and other assets, including hedge funds and private trusts.

Cash is currently at 24.7 per cent, its highest level for two years, as many funds sell off assets due to market uncertainty, according to Multiport.

Direct property allocation reached its highest level since December 2008 as more funds took advantage of gearing strategies, possibly exacerbated by share market uncertainty, Multiport found.

Overall around 16 per cent of funds in the survey were utilising a limited recourse borrowing arrangement, with just over half of loans invested in property at an average of $217,000 per loan and just under half in financial assets at around $238,000 per loan.

An increase in loan amounts for financial assets in the quarter was predominantly due to the use of protected equity products, with higher gearing ratios than is currently available for direct property, Multiport stated.