Self-managed super fund (SMSF) trustees are increasingly turning to term deposits to maximise their returns on cash holdings, according to RaboDirect.
Their goal, according to Tim Hewson investments manager RaboDirect Australia and New Zealand, is to take advantage of interest rates that remain very attractive, despite the falling cash rate.
"Term deposits are increasingly becoming a key part of SMSF strategies," he said. "This is largely due to the continuing uncertainty in the global economy and the local share market.
"In such an environment, the cash hub in SMSFs has become of significantly greater importance to trustees who search for certainty, stability and safety."
Hewson said that for those trustees nearing retirement, liquidity was key, and for those investors the length of the term was also very important.
"Historically, we have found that term deposits appeal to an older, more risk-averse customer," he said. "Interestingly, we are now seeing younger people turning to term deposits due to the certainty of returns.
"With continuing speculation that the RBA [Reserve Bank of Australia] will cut interest rates again before the year's end, locking money away in a market leading term deposit now can help reduce the impact such a cut will have on cash savings."
