Retirement
SMSF portfolios facing ‘concentration risk,’ investors warned
Stock allocations within SMSF portfolios are insufficiently diversified, according to new Investment Trends research, with more than half the equity assets in an average SMSF allocated to financials and banks.
SMSF portfolios facing ‘concentration risk,’ investors warned
Stock allocations within SMSF portfolios are insufficiently diversified, according to new Investment Trends research, with more than half the equity assets in an average SMSF allocated to financials and banks.
Based on findings in the Investment Trends 2015 Self-Managed Super Fund (SMSF) Report, Investment Trends' head of research, Recep III Peker, said SMSFs currently allocate 31 per cent of their share portfolio to bank or financial stocks and another 21 per cent to resources and material stocks.
The report was based on a survey almost 4,000 SMSF trustees and 501 financial advisers, and also found that 22 per cent of SMSFs have half of their equity portfolio in financial stocks alone.
Mr Peker said SMSFs holding fewer stocks typically have a much higher concentration risk in their portfolios.
“Even among those holding more than 20 stocks, 20 per cent say over half of their share portfolio is invested in financial and/or resource stocks,” the report said.
“When you think about how banks have done over the past six months or how resource stocks have done in the past year, you have to wonder, were their portfolios sufficiently diversified to mitigate the performance of those stocks in their portfolios,” Mr Peker said.
SMSF trustees, he said, are beginning to recognise they need to increase the diversification of their portfolios and are increasingly looking at managed funds as a way to do this.
“One key growth area recently has been exchange-traded funds,” Mr Peker said.
“What we find now is that 82,000 SMSFs hold ETFs within their portfolio: that’s an increase of 55 per cent from the previous year.”
There were 53,000 SMSFs using ETFs within their portfolio in 2014, Mr Peker said.
Vanguard head of market strategy and communications Robin Bowerman said the large portion of assets SMSFs continue to hold in direct shares, and the increasing levels of excess cash, present a range of issues for SMSF portfolios.
“They may be building in more concentration risk at a time when trustees are increasingly concerned about financial markets,” Mr Bowerman said.
“However, it is positive to see investors, both advised and unadvised, increasing their diversification through vehicles like managed funds and ETFs.”
RELATED ARTICLES
Self managed super fund
Financial progress hinges on ambition, not income, says Stake Report
Australia faces a financial turning point, with new research from online investment platform Stake revealing a nation divided into two distinct groups: the 'Starters', who invest and feel in control ...Read more
Self managed super fund
OKX targets Australia's $1 trillion SMSF market with new crypto platform launch
In a significant move aimed at capitalising on Australia's burgeoning digital asset market, global onchain technology company OKX has unveiled a new Self-Managed Super Fund (SMSF) expansion on its ...Read more
Self managed super fund
Industry leaders launch SMSF Innovation Council to drive digital transformation
A consortium of finance industry leaders has launched an SMSF Innovation Council to help Australia's $1.02 trillion self-managed superannuation fund industry navigate digital transformation. Read more
Self managed super fund
Superannuation guarantee to be paid on government paid parental leave, says ASFA
The Association of Superannuation Funds of Australia (ASFA) has hailed the government's decision to include Superannuation Guarantee payments with its Paid Parental Leave policy as a critical step ...Read more
Self managed super fund
SMSF experts advise against hasty reactions to potential super tax changes
As the Australian Government proposes a new tax measure on superannuation earnings for balances exceeding $3 million, experts from the self-managed super funds (SMSF) sector are urging members not to ...Read more
Self managed super fund
Federal government announces changes to superannuation contribution caps
The Federal Government has announced changes to the superannuation contribution caps, impacting self-managed super funds (SMSFs) and their members from 1 July 2024. Read more
Self managed super fund
SMSF Association calls for joint effort to tackle early super access
The SMSF Association is calling on a collaborative approach including the Government, the Australian Taxation Office (ATO), the Australian Securities and Investments Commission (ASIC), and the ...Read more
Self managed super fund
Rest Super members file class action over alleged insurance premium deductions
Shine Lawyers has initiated a class action lawsuit against Rest Superannuation (Rest), alleging the unlawful deduction of income protection insurance premiums from members' superannuation accounts. Read more
Self managed super fund
Financial progress hinges on ambition, not income, says Stake Report
Australia faces a financial turning point, with new research from online investment platform Stake revealing a nation divided into two distinct groups: the 'Starters', who invest and feel in control ...Read more
Self managed super fund
OKX targets Australia's $1 trillion SMSF market with new crypto platform launch
In a significant move aimed at capitalising on Australia's burgeoning digital asset market, global onchain technology company OKX has unveiled a new Self-Managed Super Fund (SMSF) expansion on its ...Read more
Self managed super fund
Industry leaders launch SMSF Innovation Council to drive digital transformation
A consortium of finance industry leaders has launched an SMSF Innovation Council to help Australia's $1.02 trillion self-managed superannuation fund industry navigate digital transformation. Read more
Self managed super fund
Superannuation guarantee to be paid on government paid parental leave, says ASFA
The Association of Superannuation Funds of Australia (ASFA) has hailed the government's decision to include Superannuation Guarantee payments with its Paid Parental Leave policy as a critical step ...Read more
Self managed super fund
SMSF experts advise against hasty reactions to potential super tax changes
As the Australian Government proposes a new tax measure on superannuation earnings for balances exceeding $3 million, experts from the self-managed super funds (SMSF) sector are urging members not to ...Read more
Self managed super fund
Federal government announces changes to superannuation contribution caps
The Federal Government has announced changes to the superannuation contribution caps, impacting self-managed super funds (SMSFs) and their members from 1 July 2024. Read more
Self managed super fund
SMSF Association calls for joint effort to tackle early super access
The SMSF Association is calling on a collaborative approach including the Government, the Australian Taxation Office (ATO), the Australian Securities and Investments Commission (ASIC), and the ...Read more
Self managed super fund
Rest Super members file class action over alleged insurance premium deductions
Shine Lawyers has initiated a class action lawsuit against Rest Superannuation (Rest), alleging the unlawful deduction of income protection insurance premiums from members' superannuation accounts. Read more
