SMSFs eye international shares, direct property

Self-managed superannuation fund (SMSF) investors are most likely to invest in international shares and direct residential property in 2008, a new study has revealed.

The study, by CompareSMSF, an online network of SMSF investors, found that 37 per cent of respondents were most likely to invest in international shares this year, while 22 per cent said they were most likely to invest in direct property.

According to CompareSMSF, the strong interest in direct property, particularly residential, is most likely to be linked to legislative changes last year allowing SMSFs to borrow via the official expansion in the use of instalment warrants.

The results are in line with an earlier CompareSMSF study in which 60 per cent of the 950 respondents identified direct property as their preferred investment option if they were allowed to use debt.

The most recent study also found that although SMSF investors showed an increasing interest in international shares, many were uncertain about how best to gain exposure to them and how to manage the associated currency risk.

CompareSMSF described SMSF investors as cautiously optimistic about the 2008 investment landscape, saying many were awaiting the release of new products to market and the Federal Government’s confirmation of the above-mentioned legislative changes.

According to CompareSMSF, many SMSF investors are mindful of what happened in the UK when similar legislative changes were proposed for SIPPS, the UK equivalent of SMSFs. A 2005 media-led campaign fuelled by widespread concern about investor participation in the residential property market in the UK caused a u-turn on the policy just prior to its planned implementation in 2006.