SMSFs ‘missing’ booming sectors, Invast claims
Based on the latest ATO statistics, global brokerage firm Invast says SMSF investors are allocating record amounts to Australian cash investments and ignoring potential boom sectors.
Chairman of Invast Australia’s investment committee Gavin White said the SMSF statistical report for the June 2015 quarter shows the allocation of SMSF assets to cash and term deposits overall jumped to $157.7 billion from $155.7 billion in the March quarter.
According to Mr White, cash investments now represent 27 per cent of all SMSF assets.
International shares on the other hand represented $1.8 billion in SMSF assets or less than one per cent of all SMSF assets.
SMSF investors overall allocated $533 million to offshore managed investments and $329 million to offshore property.
Mr White stated there were two potential problems with this since they could miss out on superior returns offered by offshore financial markets, with the S&P/ ASX 200 underperforming the US stock market, and underperforming most European markets over the past year.
“SMSFs are missing out on booming sectors, such as the all-important healthcare and technology industries, for example, which aren’t well represented in the ASX/ S&P200, while they have overdosed on bank and resources shares,” said Mr White.
By not diversifying offshore, Australian investors could be missing out on currency depreciation benefits also, he said.
“Given we can expect sustained weakness from the Australian dollar, this means many SMSF investors are missing out on an important risk buffer offered by a falling local currency,” said Mr White.