SMSFs warned on impact of royal commission on bank stocks
In light of the announcement of a royal commission into the Australian financial services sector, SMSF investors have been urged to review their allocations to Australian bank shares.
While SMSFs have been excluded from the terms of reference for the royal commission into the financial services sector, SuperConcepts executive manager of SMSF technical and private wealth Graeme Colley warned they could still be affected from an investment point of view.
“Depending on what the outcome of that review is, funds that have high exposures to bank shares may end up with lower dividends and the value of those shares may drop,” said Mr Colley.
“So from an investment point of view it’s important to think about. Is it better to invest or not invest in bank shares now, and how will dividends be impacted in the longer term for SMSF investors?”
Given the volatility of markets and the low return environment, Mr Colley said SMSF trustees may want to consider reviewing all of their investments.
“You’re not getting great returns out of bonds and property may have had its run,” he said.
Getting a loan for a lot of properties could also now be more difficult for SMSFs, he said, following some of the credit restrictions imposed by the banks due to APRA’s involvement.
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.