Cracks appear in the SMSF wall of cash
While the majority of self-managed superannuation funds (SMSF) continue to hold cash, there are signs that as much as $7.35 billion will be reinvested within the next 12 months.
The Westpac Self-Managed Superannuation Report, conducted by CoreData, found that 6.4 per cent of the 810 SMSF trustees surveyed intend to hold cash for less than a year.
Of those that intend to move out of cash in the next year, 30 per cent plan to invest in direct shares and 17 per cent said they would invest their cash in direct global equities.
One quarter of respondents said they were exiting cash as opportunities permitted; 17 per cent are waiting for better economic numbers out of Europe; and 15 per cent are looking for better signs from the US.
Westpac director of economics Matthew Hassan said the 25 per cent cash holding in SMSFs was very conservative compared to the 15 per cent figure for the broader superannuation sector.
"When and how this stockpile of sidelined cash is deployed will most likely determine the timing and mix of the next market recovery," Hassan said.
"The message from SMSF trustees … is that the timing will depend on events in the global economy, particularly Europe, and that equities will be the key asset class to benefit when cash is deployed," he said.
The SMSF trustees surveyed self-reported a return of 9 per cent for the last 12 months before fees and tax, and 59 per cent of respondents claimed to have made a positive return on their SMSF for the last year.
The report also surveyed 112 non-SMSF trustees, and found that 54 per cent of them would be open to establishing an SMSF in the future.
Of the respondents who were toying with the idea of starting an SMSF, the average age was 45.6 and 83 per cent were male.
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