Pension phase SMSFs favouring domestic shares, avoiding property

SMSFs in pension phase allocate more of their assets to domestic shares than funds in accumulation phase, while having less invested in property, new research has found.

SMSFs in pension phase have a stereotype of being more conservative and driven by yield. The latest Class SMSF Benchmark Report has analysed the investment habits of pension and accumulation phase SMSFs to find if this was actually the case.

The research found that pension SMSFs (which Class defines as having at least one member in pension phase) have a strong preference for domestic shares over international ones. They hold 33% of gross assets in domestic equities compared to 23% for accumulation funds. Only 1.0% of gross pension SMSF assets are held in international shares, compared to 1.2% for accumulation SMSFs. Read more...

SMSFs with more members also more risk averse

SMSFs with more members tend to be more risk averse, according to new research.

SMSFs with more members tend to invest more heavily in cash, and less in equities, according to the Gender and group bias in SMSF allocation report by SuperConcepts and the University of Adelaide’s International Centre for Financial Services.

The research also suggests that male SMSF members prefer riskier assets, holding more of their super balances in shares and property, compared to women.

SuperConcepts General Manager of Technical Services and Education Peter Burgess said the research highlights two behavioral factors that have a significant influence on how SMSFs allocate assets – gender bias and group behavior. Read more...

Bearish markets pushing SMSFs away from moderate asset allocations

SMSFs are switching away from moderate asset allocations to both more aggressive and more defensive allocations, in part due to bearish market expectations, according to new research.

The 2017 Vanguard/Investment Trends SMSF Report found that 114,000 SMSFs changed to a more defensive assets allocation in 2017, compared to 107,000 in 2016. The number of SMSFs changing to a more aggressive allocation also “grew strongly”, to 57,000, up from 37,000 in 2016.

“In 2017, SMSFs are becoming more focused on growing their nest eggs. Amid this shift in focus, investor appetite for exchange-traded funds (ETFs), and residential property continued to increase, while blue chip and high-yielding Australian shares were still high on the agenda for many trustees,” said Vanguard. Read more...

SMSF trustees are unfairly criticised for investment decisions

SMSF trustees criticised investment decisions“In the eyes of their critics it seems SMSF trustees can never get it right on the investment front,” said SPAA Director of Technical and Professional Standards, Graeme Colley.

Previously SMSFs have been criticised for holding too much cash, then property, and now for being “overweight in Australian equities, especially the fully franked blue chips such as the banks and Telstra.”

“Why can’t they ever make up their minds if there is a problem with SMSFs?” Read more...