SMSFs asset allocation too risky: Finametrica
Self-managed super funds (SMSFs) are exposing their portfolios to a high investment risk, with a shift towards growth assets, co-founder of Finametrica, Paul Resnik said.
In the June 2015 quarter, SMSFs allocated one third of all their assets ($187.1 billion) to Australian shares, with just $1.8 billion invested in international shares.
The numbers highlight a "risky allocation" of assets which was dominated by growth assets like local property and shares — a trend Resnik maintains is "potentially out of line" with the risk tolerance of most SMSF trustees.
"SMSFs need to ensure they achieve greater asset diversity with their portfolios and a greater awareness of their ability to tolerate investment risk," Resnik said.
"SMSFs would be prudent to consider how they can diminish their Australian equities risk and rebalance their portfolios to incorporate greater offshore diversification and an overall lesser exposure to equities."
Resnik affirmed that many SMSFs are in need of good investment advice to help them be ready for market volatility.
"If the Australian dollar continues to fall, investors could see even greater gains from holding unhedged offshore investments, whether bonds, shares or alternative assets," Resnik said.
"By better understanding how financial markets work, and the impact of asset allocation on portfolio behaviour, SMSFs can better prepare for market downturns when they happen."
Recommended for you
Women are expected to inherit US$124 trillion through the intergenerational wealth transfer, but Capital Group has found they are twice as likely to rely on social media for advice over a financial adviser.
Challenger Investment Management has raised $350 million during the offer period for its new ASX-listed investment structure.
A week after Lonsec downgraded multiple funds from Metrics Credit Partners, rival research house Zenith Investment Partners has opted to retain its ratings for the same funds.
Strong adviser engagement has helped Praemium reach $1 billion in inflows on its Spectrum offering, with a deal with Western Australian wealth firm Euroz Hartleys expected to add as much as $2 billion.
