SMSFs re-embrace equities

Self-managed superannuation fund (SMSF) trustees have increasingly let go of the safety of cash to move back into equities, according to new data released this month.

The data, released by administrator Multiport, revealed that SMSF trustees increased their allocation to Australian shares from 32 per cent at 31 December, 2008, to 42 per cent by the end of 2009, while cash and deposits that had built up during the global financial crisis continued to decrease in the first quarter of 2010.

The average contribution flow for the nine months to 31 March, 2010, was $23,000 per fund, but these inflows were not being allowed to build up as cash as they had been during 2008 and early 2009, according to Multiport.

Cash holdings increased from 12 per cent to 29 per cent during but this had dropped back to 21 per cent by the end of March 2010.

There was a heavy weighting towards the top 20 ASX-listed stocks, which accounted for 16 per cent of all SMSF assets, while international shares represented just 7.4 per cent of assets, down from 13.7 per cent at the end of 2007.

Property allocation was still substantially lower than it was before the crisis, dropping from 22 per cent in 2007 to less than 16 per cent in March 2010. Fixed interest accounted for 11.5 per cent of SMSF holdings, almost back to pre crisis levels after dropping to 10.6 per cent in 2008. Managed fund exposure had stabilised at just over 20 per cent after dropping from 36 per cent to 20 per cent over the course of 2008.

“Even though we have seen a movement of cash throughout 2009 into equities, the SMSFs are still comparatively conservatively invested,” Multiport said.

“The first quarter of 2010 will have brought mixed but generally positive returns to the average SMSF. However, with the very recent market pull back, it will be interesting to see if SMSFs treat this as an opportunity to top up share market holdings or stay on the sidelines.”