SMSF Asset Allocation Survey

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AMP Limited recently released the results of its SuperConcepts SMSF Investment Patterns Survey for the 12 months ending June 30.

This survey highlights the investments decisions made by SMSF Trustees. A summary of the key finding of the report are:

  • Cash increased 1% to 18%
  • Investment in Australian shares fell from 37.1% to 34.5%
  • International share allocations declined 1% to 13.1%
  • Direct and indirect property assets increased from 18.3% to 21.7%
  • The four major banks (CBA, ANZ, NAB, Westpac) and Telstra Corporation Ltd remained the five most commonly held investments.

Investment in Equities has fallen, both Domestic and International, while cash has increased along with property. With cash rates at historic lows such swings beggar belief.

While we may consider a short-term tactical swing to cash while we anticipate a fall in the market or wait to find our next investment the reality remains that even if the market had only gone sideways over the financial year Dividend Yields are so much greater that you would be behind by approximately 2-3% over the year.

Cash is important in a SMSF but a well structured portfolio shouldn’t cause concern and would deliver greater income.

The big increase in property is also interesting. The increase in borrowing to invest in property through SMSF’s has been very popular so this result is no surprise. We feel however that this trend is a cause for concern. There is a lot of property development which has even the RBA concerned (to the point they have conducted deep analysis of the outcome of a property crash) that a fall in property prices will occur.

As always, we encourage diversification across asset classes. Keep some cash handy. And most importantly be prepared for the volatility that will arise.

By: Nick Rundle