Diversification of SMSF investments top priority for advisers

Diversification is the top priority for advisers when choosing SMSF investments, according to new research.

Research commissioned by BT and the SMSF Association found that 78% of advisers thought diversification was the top priority for SMSFs when selecting investments. 48% chose capital growth, 45% capital preservation, 42% liquidity and 41% product costs.

Almost all advisers surveyed – 97% – agreed that it was important that their SMSF clients have well diversified portfolios, but not all SMSFs are achieving this goal.

The same research paper found that 73% of advisers believe their SMSF clients had well diversified portfolios. This may be because advisers find it harder to diversify SMSF portfolios, with 62% of advisers saying they found it difficult.

BT’s Head of Adviser Distribution Jo Moxey said this could be a result of direct property investments in SMSFs.

The research found 89% of advisers consider a portfolio of managed funds, direct shares and property to be diversified.

64% of advisers said a portfolio of 30 individual direct shares may not have enough diversification. 47% of advisers said a portfolio of Exchange Traded Funds (ETFs) is sufficiently diversified. 87% believe having investments across four or more assets classes to be ideal.

“Diversification can be achieved in a variety of ways, but having access to a broad range of investment options is vital,” said Ms Moxey.

The BT/Investment Trends SMSF Planner Research Paper is based on a short quantitative online survey of financial planners between February and March 2018, with 163 responses. The research was conducted by Investment Trends and commissioned by BT Financial Group and the SMSF Association, as part of a four year partnership.

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