Will this week's Reserve Bank of Australia 0.5 basis point cut in interest rates prompt self-managed superannuation fund (SMSF) investors and retail investors to exit cash?
That is the question which has been posed this week by Rabodirect, which has pointed to a possible dismantling of what it describes as "the great wall of cash".
It said the cut in interest rates from 4.25 per cent to 3.75 per cent would see increased pressure on cash.
RaboDirect investment manager Tim Hewson said that regardless of what happened in the market, the cash hub remained central to any SMSF.
"When interest rates fall, it is even more important that investors get the most from it," he said. "This means due diligence is required on the part of the trustee to ensure they are maximising returns."
Hewson said that, at the very least, this week's rate should act as a wake-up call for SMSF trustees and encourage them to look under the bonnet of their portfolio to make sure they are suitably invested in products that suit the needs of their members.
