Home bias putting SMSFs at risk

self-managed super funds SMSF cent SMSFs term deposits real estate

2 March 2015
| By Malavika |
image
image
expand image

Most self-managed super funds (SMSFs) and retirement investors are failing to realise the risks of predominantly investing in Australian assets, according to FinaMetrica.

SMSF investors invested only 0.4 per cent or $2.4 billion in international shares.

But standing at $176.2 billion, Australian shares made up 32 per cent of all SMSF assets, and cash and term deposits stood at $156.7 billion, which is 28 per cent of all SMSF assets.

"SMSFs are continuing to focus their investment efforts in Australia, with a huge bias towards local assets almost to the total exclusion of those offshore," co-founder of FinaMetrica Paul Resnik said.

"This is exposing SMSFs to significant investment risks and they should urgently be reviewing their asset allocations before these risks are crystallised. When Australian markets correct — and they will — SMSFs will be hard hit given the sheer size of their exposure to Australian shares."

A recent Investment Trends/Morningstar report on the importance of advice found the biggest barrier to obtaining more international exposure in a portfolio for investors is lack of knowledge of overseas markets, with 42 per cent of the 743 respondents citing this reason.

SMSFs allotted record amounts to Australian property with $69.9 billion invested in non-residential property as at September 30 and a further $21.1 billion in residential real estate. This represents a total of 16 per cent of all SMSF investments.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

3 weeks 6 days ago

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

1 month ago

Interesting. Would be good to know the details of the StrategyOne deal....

1 month ago

Insignia Financial has confirmed it is considering a preliminary non-binding proposal received from a US private equity giant to acquire the firm. ...

1 week 4 days ago

Six of the seven listed financial advice licensees have reported positive share price growth in 2024, with AMP and Insignia successfully reversing earlier losses. ...

1 week ago

Specialist wealth platform provider Mason Stevens has become the latest target of an acquisition as it enters a binding agreement with a leading Sydney-based private equi...

6 days 16 hours ago