SMSFs to reduce cash holdings, research shows
More than half of the SMSF trustees in a recent survey have admitted they are dissatisfied with the performance of their cash investments, with a third planning to reallocate funds in the next year.
The research, conducted by CoreData on behalf of Zurich, involved 505 respondents and found that 51 per cent of SMSF trustees were dissatisfied with the performance of their cash investments.
Almost a third of those dissatisfied, or 32.3 per cent, said they intended to allocate away from cash within the next 12 months.
According to Zurich, investors may be looking to allocate this money offshore instead, with the survey indicating that one in seven SMSF trustees plans to increase their exposure to international equities over the next 12 months.
However, the report also reveals some barriers to overseas investment, said Zurich, with 51.5 per cent of SMSFs saying they would consider reallocating cash to international equities if they had access to appropriate advice and education.
“Just over one third, or 35.2 per cent, said they would prefer a financial adviser to be their source of education, compared to 13.1 per cent preferring their accountant,” said Zurich.
According to the survey, over half of the poll respondents who stated they are likely to invest in international investments within the next 12 months said they would choose a managed fund as their preferred option.
Zurich national sales manager Linda Stangherlin said it was encouraging to see there is a strong and continuing role for professional advice to help guide investment decision making, even among SMSF trustees.
“Whilst there is clearly angst amongst SMSF trustees, and indeed all investors, about the continuing low cash rates, a lack of knowledge and perceived tax and currency risks are quelling enthusiasm for global opportunities,” she said.
“However, with the right help and support from a financial adviser, the shift towards international equities, and even other non-cash sectors, would be more pronounced.”
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.