Push for SMSF investors to look into global equities
Global equities make up only a small proportion of total self-managed super funds (SMSF) assets and investors are "missing the boat", according to Insync Fund Managers.
The boutique fund manager said the latest Australian Taxation Office numbers for September 2013 showed direct overseas shares account for only 0.4 per cent of total SMSF assets. This is a small percentage, even when global equities in managed funds held by SMSFs are counted.
Australian listed shares, cash and term deposits, direct investment properties and Australian managed investment trusts dominate SMSF holdings.
Insync said this was understandable if those shares paid fully franked dividends yielding more than cash. But Australia's share market was quite concentrated, with financials and materials making up 60 per cent of total market capitalisation.
"Most local investors are missing out on diversification into world class companies in sectors that are under-represented on the Australian share market, such as technology, pharmaceuticals, food & beverage, consumer brands, aerospace and luxury goods," Insync's head of research Marcus Tuck said.
He said SMSF investors could take advantage of the Australian dollar, which is still trading above average, and give more weight to global stocks.
"Many of those global companies have impressive track records of compounding earnings and dividends at a rate and consistency that would be difficult for all but a handful of Australian companies to achieve," Tuck said.
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