SMSF trustees are turning away from their cash holdings and borrowing arrangements as contribution levels climb, according to new research from Multiport.
In its quarterly Multiport SMSF Investment Patterns Survey for June 2014, which covers approximately 2,200 funds, Multiport found cash holdings in SMSFs reached a “record low” of 18.29 per cent, indicating this is a “less attractive option” for investors.
AMP SMSF administration head of technical services, Philip La Greca, said the “significant decrease” in cash holdings has mainly flowed into international, property and equity sectors.
“International equities have performed strongly throughout the year and we’ve seen an increase in funds in this asset class, as more investors move their investments away from underperforming asset classes, especially cash,” Mr La Greca said.
The allocation of funds to Australian equities has been lower than expected over the past three quarters due to the performance of Australia’s top 20 stocks, Multiport stated.
“Australian shares are still very popular with SMSF trustees, with close to 40 per cent of all funds allocated to this asset class. However, over the past three quarters we’ve seen slight decreases in the amount of funds invested in Australian shares. This is largely due to the higher weighting in the top 20 local stocks, which have under-performed the All Ordinaries in the 2014 financial year,” said Mr La Greca
Multiport also found that while property remains a popular investment option for SMSF trustees, the number of funds utilising a borrowing arrangement has declined to 15.6 per cent, compared with 16.8 per cent in the past quarter.
The average property loan for the quarter was $272,000, Multiport also found.
Contribution levels have also been climbing, Multiport said, with the average contribution inflow per fund for the June 2014 quarter increasing 27 per cent to $13,750.
“Generally we see contribution levels climb in the last quarter of the financial year as members add to their fund in line with contribution caps. However, the increase in contributions for the 2014 financial year is the biggest we’ve seen since the higher cap for those over 50 ended in 2012,” said Mr La Greca.
“This increase is most likely the result of the increase in the concessional cap for members over age 59 to $35,000 compared to a cap of $25,000 applying to all ages for the previous financial year. The increase in the super guarantee from 9.25 to 9.5 per cent would have also increased contribution levels,” he said.
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
- 17 Aug 2017Industry questions ATO’s capacity for new reportingBy Miranda Brownlee
- 17 Aug 2017Qld succession law changes tipped to impact SMSFsBy Miranda Brownlee
- 16 Aug 2017Contribution limits restricting future balances, warns mid-tierBy Staff Reporter
- 16 Aug 2017SMSF firms underprepared for events-based reportingBy Miranda Brownlee
- 15 Aug 2017SMSF auditor disqualified for misconductBy Staff Reporter
- 15 Aug 2017Class gains market share in financial year resultsBy Staff Reporter
- view all
- Industry questions ATO’s capacity for new reporting
With events-based reporting set to generate huge amounts of data, concerns have been raised about whether the ATO’s systems will be able t...read more
- Contribution limits restricting future balances, warns mid-tier
Clients hoping to accumulate a superannuation balance of $1.6 million by age 65 will need to start taking full advantage of concessional con...read more
- SMSF firms underprepared for events-based reporting
A straw poll has revealed that the majority of SMSF firms currently feel their firm is not equipped to deal with the proposed events-based r...read more
- view all