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Younger Aussies embrace SMSFs
There was a 9.3% increase in new self-managed superannuation fund (SMSF) accounts opened in FY22 Q1, compared to FY21 Q1, with millennials representing the fastest-growing segment of new accounts, according to data.
The Australian Investment Exchange Limited (AUSIEX) said the trend started in 2020 where the Generation Y represented 10% of all new SMSF accounts, doubling the rates from 2016 to 2019.
On top of that, the number of SMSF accounts owned by members of Generation Z, which included those born between 1997 and 2012, also doubled over the past 12 months.
AUSIEX chief executive, Eric Blewitt, said recent years of government and regulatory reviews of the super system prompted greater awareness of super among younger Australians.
"SMSFs have traditionally been the domain of those with higher fund balances and those approaching the decumulation phase. SMSFs may be appealing to younger people due to the fact they provide greater control over investments,” he said.
"All of this data is painting a picture of much greater interest from younger people in taking control of their financial goals.”
Separately, the number of female SMSF account holders increased, with the male to female ratio for new SMSF account holders now standing at1 to 1.33.
The AUSIEX data also found that SMSF book grew by an average of 5% for each of the last three years and is made up of 53% advised (advised and advised platform), and 47% directly held accounts. Advised SMSF new accounts saw a renewed increase since June 2021, with September 2021 representing a 16-month high.
Also, AUSIEX found that SMSF accounts were 30% more likely to trade compared to non-SMSF accounts, with the top 10 most traded stocks for the SMSF segment being heavily weighted towards blue chips such as BHP, Westpac, the Commonwealth Bank, NAB, Woodside Petroleum, CSL, ANZ, Fortescue Metals, Macquarie Bank, and Telstra.
At the same time, SMSF accounts were less invested in exchange traded funds (ETFs) compared to other accounts. New accounts held by Gen Z surprisingly had the lowest percentage of ETF investments (19.23%) in their SMSF compared to all older generations, who sit between a range of 27% to 32%.
"The long-held view that Australians do not actively engage with their super until they near retirement looks to be changing," Blewitt said.
"However, this data raises questions whether advisers and fund managers might need to pivot to attract and retain clients who appear to be paying much more attention to their super and the investments within."
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