Investment in direct property saw the largest increase of all investment classes among OneVue’s SMSF clients in the 12 months to the end of March, according to the SMSF services provider.
According to figures from OneVue, direct property saw the largest percentage jump, increasing by more than 53 per cent from an average asset allocation of 4.38 per cent in March 2013 to 9.37 per cent in March 2015.
Cash and term deposits on the other hand saw a decline of 31 per cent during the same period, from nearly 27 per cent in 2013 to just over 20 per cent in 2015.
The three most popular investment classes for SMSF trustees are cash and term deposits, listed shares and self-managed assets, and direct property, according to trend statistics monitored by OneVue.
OneVue’s head of strategic relationships, Alex Wise, said there is a trend for investors to move into riskier asset classes to balance falling yields from traditional investment selections.
“Currently, cash rates are reaching historic lows and there is a significant upward trend in direct property investment driven by low mortgage rates,” said Mr Wise.
“However, loans in the investment mix are falling, raising questions about whether investors are leveraging their property acquisitions through their borrowings.”
Mr Wise said that given that property requires a long-term horizon to generate a return of around 10 years or more, it remains a relatively small proportion of the overall SMSF investment portfolio.
“The trend is now growing [however], with valuations exacerbated by the housing bubble in Sydney and Melbourne,” he said.
“[Another] noteworthy trend is the increase in investments in unit trusts which have increased from 12.22 per cent to 23.09 per cent in the 12 months to March 2015, showing managed schemes are being increasingly favoured by investors.”
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