New research shows SMSFs reduce cash, property exposure
SMSF trustees reduced their cash and property holdings in the September quarter and are looking to Australian equities instead, according to Multiport.
The Multiport SMSF Investment Patterns Survey, covering 2,500 SMSF funds, showed SMSF allocation to cash had declined 1.3 percentage points in the three months to 30 September 2014.
AMP SMSF administration head of technical services Philip La Greca said low interest rates continue to make cash less attractive as an investment, resulting in trustees not renewing term deposits at maturity.
Mr La Greca said while overall cash holdings are in decline, term deposits have seen the largest decline as an investment vehicle in the past 12 months, falling from 7.6 per cent in September 2013 to 5.3 per cent in September this year.
“With no sign of term deposit rates increasing in the near-term, we’ll likely see cash holdings continue to decline,” said Mr La Greca.
The survey showed asset allocation to property also fell, declining 1.5 percentage points in the past quarter with the overall asset allocation to property in an SMSF, including direct, listed property and managed funds now sitting at 16.3 per cent.
Mr La Greca also said the portion of SMSFs with direct property investments using limited recourse borrowing arrangements has declined by 3.1 percentage points to 34.4 per cent.
Overall he said 14.8 per cent of SMSF trustees are currently using a borrowing arrangement in their SMSF, a slight decline from 15.6 per cent in the previous quarter.
Australian equities rose 1.5 percentage points during the September quarter, according to the survey.
“Despite a recent downturn in the domestic market, it appears SMSF trustees are overall optimistic about long-term gains in Australian equities,” said Mr La Greca.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.