SMSFs ‘vulnerable’ to market collapse
SMSF portfolios are overexposed to Aussie equities and “risky growth assets,” leaving trustees vulnerable to a market downturn, one profiling firm has warned.
FinaMetrica co-founder Paul Resnik pointed to Australian Taxation Office data that show SMSFs had invested $177.6 billion in listed Australian shares as at the end of the June 2014 quarter.
Listed Australian shares accounted for nearly one third, or 32 per cent, of all SMSF assets in the June quarter.
Mr Resnik said SMSF investors ought to think carefully about their overexposure to Australian assets; their underexposure to professional investment management; and their overall exposure to ‘risky’ growth assets.
“By being so heavily exposed to Australian asset classes, SMSFs leave themselves vulnerable to our local market collapse when that happens – and it will,” he said.
“Many SMSFs don’t understand, can't easily access or accept the importance of international diversification and so they don’t invest meaningfully offshore,” Mr Resnik said.
He added that many SMSF investors “don’t understand [exchange-traded funds] and hold managed funds in low esteem”.