SMSFs not favouring property but opting for cash and equities
Self-Managed Superannuation Funds (SMSFs) have on average only seven per cent of their total holdings in residential property, regardless of the size of the fund, hosing down claims that SMSFs are moving into that sector as investors.
Rather SMSFs have continued to be typically weighted towards cash, equities and managed funds, with those three sectors accounting for 73 per cent of the average SMSF portfolio mix.
The portfolio make-up of SMSFs was confirmed as part of the research conducted and released by the Financial Services Council and UBS in their joint State of the Industry Report, released yesterday. The research surveyed the demographics and portfolio holdings of six hundred SMSF holders nationwide during early October.
Of those SMSF funds that were invested in property 14 per cent reported that were leveraged into the sector compared with 10 per cent who were leveraged into equities.
The report stated that cash was the predominant asset held by SMSFs representing 35 per cent of a typical portfolio while Australian equities made up 23 per cent of the portfolio and managed funds 15 per cent with direct property at seven per cent and other forms of property — such as listed and direct commercial — accounting for four per cent each.
The report stated portfolio allocations were skewed towards cash, Australian equities and managed funds when balances were lower and moved towards higher investments in trusts and property as fund balances increased.
"That said, however, residential property and more esoteric investments such as valuable artworks rarely form more than five per cent of the investment mix regardless of the size of the SMSF," according to the report.
The report also stated that there was "very little foreign investments of any kind held in SMSFs across the board, which is noticeably different to the larger Australian Prudential Regulation Authority (APRA) regulated industry and retail funds" but that 15 per cent of SMSF fund holders considering diversification were looking at international equities.
The report also stated that 12 per cent of SMSF fund holders were considering diversifying into shares in infrastructure companies and that with $546.9 billion invested in SMSFs there was a potential pool of $54.69 billion available for investment in companies or equity providers in this sector.
AUTHOR
Jason Spits
Recommended for you
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
Amid a growing appetite for alternatives, investment executives have shared questions advisers should consider when selecting a private markets product compared to their listed counterparts.
Chief executive Maria Lykouras is set to exit JBWere as the bank confirms it is “evolving” its operations for high-net-worth clients.
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
