SMSF investors have been warned they are facing significant losses in their Aussie equities holdings and that traditional defensive “safe havens” should be approached with caution.
The domestic market is only about two thirds of the way through its correction, chief economist at BetaShares David Bassanese told SMSF Adviser.
“It’s hard to think that the worst is over. The market has corrected, but it’s not super cheap,” Mr Bassanese said.
“Earnings remain under pressure, the US is [probably] going to raise interest rates and we’re still not seeing a lot of clarity in terms of the Chinese outlook or how the Chinese authorities are responding to this slowdown.
“There’s more negatives than positives floating around at the moment, so it’s hard to believe we’ve seen the worst at this stage.”
Mr Bassanese also warned that fixed income is not necessarily the “safe haven” SMSF investors would normally expect it to be in this volatile share market period.
“If you were wanting to have a defensive position you’d probably want to be in cash relative to bonds. I think fixed income-type securities are also facing their own challenges again with the Fed looking to raise interest rates soon,” he said.
Mr Bassanese’s comments come following research by Credit Suisse which suggests SMSFs are set to collectively lose $21 billion in the September quarter due to their “overexposure” to Australian equities.
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