SMSFs lag on equities improvement
Allocations to Australian equities by self-managed super fund (SMSF) trustees did not keep pace with the strong performance of the share market in the September quarter, according to the latest Multiport SMSF Investment Patterns Survey.
Overall asset allocation to Australian equities was up only 0.1 per cent to 31.8 per cent, despite the All Ordinaries being up 6.5 per cent in the same period, Multiport said.
Commenting on the survey, which covers around 1,900 funds administered by Multiport, Philip La Greca, head of technical services, said that exposures to international equities had similarly lagged.
“Despite strong performance in Australian equities for the quarter, it would seem that experience of prior volatility is making SMSF trustees cautious about further investments in this asset class,” he said.
“Investment in international shares also appears soft due to the strengthening of the Australian dollar over the quarter, which put a dampener on the offshore performance.”
According to the survey, while overall allocations to cash decreased by 0.2 per cent for the quarter, the 12-month period to 30 September has shown a significant increase in term deposits (8 per cent to 11.1 per cent) and an even more significant decrease in fixed interest holdings (25 per cent).
“Cash allocations have remained fairly steady since last quarter,” La Greca said.
“In the last 12 months, trustees are trying to get more bang for their buck by significantly increased use of short-term term deposits.
“However, the five interest rate cuts in the last 12 months has reduced the attractiveness of fixed interest, which saw a sharp fall in allocation to this asset class in the quarter,” La Greca added.
Alternatively, La Greca said that SMSF trustees had not been deterred by new stringent rules for investing in collectable items and personal-use assets.
“Although collectables represent 0.05 per cent of the overall SMSF asset allocation, the asset class showed a considerable increase over the last few quarters,” he said.
“Numerically the number of collectables has increased by 22 per cent and based on value by 20 per cent.
“These trustees are either confident they will be able to meet the new rules, or have not yet addressed the requirements that will apply after 30 June 2016,” La Greca continued.
“Increased investment in some physical commodities, such as bullion, also suggests some clients are still looking for an alternative to cash.”
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