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SMSF trustees sell-down top stocks in favour of international equities

Feb 15, 2016, 00:00 AM

SMSF trustees are reducing their exposure to the top 10 stocks and increasing investments in international equitiesthrough managed funds, according to the latest Multiport SMSF Investment Patterns Survey.

In the December 2015 quarter, there was a significant move away from the S&P top 10 shares, which now represent 14.5 per cent of total fund assets, compared to 20 per cent in December 2014.

Multiport Head of Technical Services, Philip La Greca said trustees are searching for capital growth and yield outside well-known stocks.

“We’ve seen an increase in allocation to international equities, specifically through managed funds. A large contributor is likely to be distributions from managed funds at 30 June being re-invested during the December quarter. Trustees are also searching for opportunities that provide more capital growth and yield.

“While it’s a positive sign of increasing diversification by SMSF trustees, it’s also reflective of the under performance of the ASX top 20 compared to the overall equity market for the period.

“Despite the increase in international investments, the most common assets held by SMSF trustees continue to be stocks in the ASX top 20, so there remains an opportunity for further diversification,” Mr La Greca said.

Investments in Australian shares represent 35.4 per cent of all assets held at 31 December 2015, a reduction from 41.6 per cent in December 2014. During the same period, investments in cash and short term deposits increased from 16.5 per cent to 18 per cent of all assets held.

“Earlier in 2015, we saw a reduction in cash holdings with many SMSF trustees not renewing their term deposits due to the low interest rate environment.

“However, we’ve seen cash holdings increase over the last quarter following distributions from managed funds. While some of this cash has been re-invested in international equities and fixed interest, there were also a higher number of trustees increasing their cash reserves as a result of market volatility,” Mr La Greca said.

The December 2015 quarter saw a decrease in the average contribution per fund to $6,393 compared to $9,380 from the previous quarter. The average concessional contribution was $2,278 for the period, compared to $2,198 for the previous quarter.

“While the average concessional contribution increased over the quarter, we did see a reduction in non-concessional contributions which is consistent with the time of year,” Mr La Greca said.

Despite the cooling property market in late 2015, SMSF property borrowing marginally increased to 17.5 per cent in the December quarter compared to 16.5 per cent during the previous quarter among the survey base.

“One-third of survey respondents who own property in an SMSF had a gearing arrangement in place during the period. The average property loan amount was $298,000, an increase from $273,000 in the first quarter of 2015, which is reflective of the rise in property prices during the year,” Mr La Greca said.

The quarterly Multiport SMSF Investment Patterns Survey covers approximately 2,850 funds, a sample of the SMSFs Multiport administers and the investments they held at 31 December 2015. The assets of the funds surveyed represent approximately $3 billion.

For more information contact:
Philip La Greca
Head of Technical Services, Multiport
Ph: 02 9257 5326
Mob: 0407 294 667

Media enquiries:
Mark Roberts
Ph: 02 9257 1086
Mob: 0466 328 581