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Non-major finds investment mismatch in SMSF portfolios

pension annuity
Jotham Lian
27 March 2017 — 1 minute read

Over half of SMSF trustees are taking up a more defensive stance despite expecting a higher growth return on their portfolios, according to new research.

AMP Capital’s Black Sky Report shows that more than half of their trustees surveyed had more than 50 per cent of their portfolio invested in just one investment type outside of managed funds.

If trustees continue to be exposed to “significant concentration risk” with defensive assets, they may struggle to meet their retirement goals, AMP Capital’s head of self-directed wealth and SMSF Tim Keegan said.


“They want diversification, yet as it stands today they’re not necessarily getting the level of diversification to provide the kind of portfolios that they seek.”

The 2017 report identified the biggest investment challenges for SMSF trustees as market volatility (according to 18 per cent of trustees surveyed), investment selection (11 per cent) and regulatory changes (10 per cent).

“One of the things they are most concerned about is volatility in equity markets, and their secondary concern is about what to invest in next. And in the absence of having a good choice away from Australian equities, they are typically taking an overarching defensive stance,” Mr Keegan said.

The research also revealed that SMSF trustees continue to find managed funds attractive, with 47 per cent each investing approximately $280,000 in them.

“We can see through the report that their interest and understanding in ETFs have increased, but there is definitely a demand for more education,” Mr Keegan said.

“I strongly believe that is going to be an ongoing theme because the Australian market is concentrated on banks, miners and telcos, so there’s a very limited range of industry sectors and markets to be exposed to.”

Non-major finds investment mismatch in SMSF portfolios
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