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SMSF trustee interest in cash, property wanes

New research has shown that a period of record-low interest rates is driving portfolio re-allocation for SMSF trustees.

According to joint research conducted by The SMSF Association and NAB, the average proportion of cash held by SMSF trustees in their portfolio has fallen to 15.9 per cent from 19.7 per cent in 2013.

On the other hand, the average allocation to Australian equities has risen since 2013, from 36.1 per cent to 42.6 per cent.

There has also been a slight decline in the average allocation to residential property, down from 9.9 per cent in 2013 to 7.1 per cent.

The research also found a slight rise in the allocation to international equities, up from 5.3 per cent to 6.8 per cent.

“It is clear that the prevailing attitude among trustees is de-risking their SMSF portfolio and that holding a substantial proportion of cash in their portfolio is one way of doing so,” the research stated.

“However, the record low cash rate of 2 per cent, which previously remained at 2.5 per cent from August 2013 to January 2015, has likely contributed to trustees moving funds out of cash to other asset classes, particularly equities.”

Nevertheless, direct investment remains the flavour of choice among SMSF trustees.

In all but two asset classes, trustees most commonly purchase assets directly, particularly cash and term deposits at 85.4 per cent and 83.1 per cent respectively.

Property trusts and international equities are most commonly accessed via managed funds, at 51.4 per cent and 43.8 per cent respectively.

However, advised trustees are more likely to be exposed to different investment vehicles, with more than two thirds of advisers using managed funds to invest their SMSF clients’ assets, while more 43.4 per cent use exchange-traded funds.

SMSF trustee interest in cash, property wanes
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