‘Ride to hell’: SMSFs dump blue-chip stocks
Blue-chip stocks have fallen out of favour with SMSF investors over the past 12 months, as low returns and the royal commission rear their heads.
SuperConcepts executive manger SMSF technical and strategic services Phil La Greca said the past 12 months have seen a “huge swing” away from low-growth mature blue-chips towards infrastructure and ETFs.
“SMSFs are highly engaged investors and they tend to go for investments that bring solid returns particularly during retirement, and unfortunately, the top 10 stocks had a rollercoaster ride to hell this financial year,” Mr La Greca said.
“FY19 marks the souring of an enduring love affair between SMSFs and blue-chip stocks.
“Half of the ASX 10 stocks felt a negative impact from the Royal Commission into Banking and Financial Services, which lowered share values and corresponding dividends.”
Mr La Greca also said the federal election saw many SMSFs selling out early in anticipation of a Labor victory and the implementation of its proposal to end cash refunds for excess dividend imputation credits.
“We saw during the campaign that many SMSFs were reluctant to commit further if they weren’t going to get a decent return from the franking credits,” he said.
“Worse, we saw a lot of people doing a sports bet-style of decision-making and were selling out early in anticipation of an election result that never happened.
“Outside of the banking sector, SMSFs questioned the sustainability of Telstra earnings and dividend streams, while the retail sector experienced continued pain from wage stagnation that impacts consumer spending.”
Concessional contributions set for June bump
“A preliminary analysis of EOFY trends is showing an expected bump in the concessional contributions on the personal level rather than employee level,” Mr La Greca said.
“Last year, we saw a surge in personal deductions in June because individuals could get a tax deduction.
“In FY18, we saw 47 per cent of the contributions came in the June quarter, and that pattern is on track to exceed that number because even more people are now aware of this option to generate a personal tax deduction.”
