POWERED BY MOMENTUM MEDIA
SMSFs rush to defensive amid volatility
Persistent market volatility has seen many self-managed superannuation fund (SMSF) trustees make significant changes to their portfolio, with more than half becoming defensive.
AMP Capital’s ‘Black Sky Report 2017’ report revealed that 55 per cent of respondents had moved to a more defensive asset allocation, up from 53 per cent last year, while 23 per cent sold their assets for cash (up from 16 per cent last year).
However, with those trustees moving to defensive allocations doing so with the goal of generating income, the report asked if this was possible.
“Will their more defensive asset allocation actually deliver the returns or income they’re after?” the report asked.
The report also said as much as 50 per cent of trustees were exposed to significant portfolio construction risk while 76 per cent say they do not use any tools to help them with portfolio construction.
Just under half (48 per cent) of SMSF trustees said their goal was to have a fully diversified portfolio, yet more than 50 per cent of their portfolio was invested in just one investment type outside of managed funds, while 30 per cent had over half their portfolio invested in direct equities alone.
Some trustees remained positive about future market performance, with 18 per cent becoming more aggressive in their portfolios, up from 13 per cent last year.
Trustees showed an increased appetite to invest in Australian equity funds, both active and passive, presenting advisers an opportunity to recommend high quality unlisted managed funds, as well as introducing them to the growing range of passive and active exchange traded funds (ETFs).
“Demand for equity income funds is also rising, which could suggest that SMSF trustees are now more open to investing in equities to generate income in retirement,” the report said.
The quantitative online survey of SMSF trustees conducted by Investment Trends also found 30 per cent of SMSF trustees found for their most recent managed fund investment from their financial planner. They continued to find this option attractive, with 47 per cent investing around $280,000 in them.
SMSF trustees also found fewer hurdles to investing in managed funds, with 2.9 hurdles to investing, down from 3.5 hurdles last year. Almost half (45 per cent) demanded managed funds for ease of diversification, while 41 per cent wanted access to out-of-reach investments, while 36 per cent wanted international diversification.
Recommended for you
The impact of identity theft and its threat to superannuation savings were highlighted in a case that went before the Federal Court at the end of 2023.
A recent NSW Supreme Court decision is an important reminder that while super funds may be subject to restrictive superannuation and tax laws, in essence they are still a trust and subject to equitable and common law claims, says a legal expert.
New research from the University of Adelaide has found SMSFs outperformed APRA funds by more than 4 per cent in 2021–22.
The SMSF Association has made a number of policy recommendations for the superannuation sector in its pre-budget submission to the government.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.56 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
31.06 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.81 3 y p.a(%)
