With continued declines in interest rates and positive gains in the stock-market, self-managed super fund (SMSF) trustees have moved more of their cash holdings into managed funds and international equities, according to the latest Multiport SMSF Investment Patterns Survey.

In the December 2014 quarter, holdings in cash declined to 16.5 per cent, a 0.5 percentage drop compared to the previous quarter, while investment in equities increased to 54.1 per cent, up 3.8 per cent over the year, signalling trustees are searching for higher returns and growth opportunities in their fund.

AMP SMSF Administration Head of Technical Services Philip La Greca said investment in equites and managed funds is continuing to increase given the low returns in other asset classes, especially cash and term deposits.

"There's lots of opportunity for growth in the current market and SMSF trustees are adapting their portfolios to align to growth areas. In the December quarter, we saw a significant rise in the amount of people using managed funds in their portfolio to increase exposure to international markets. Managed funds now represent 19.5 per cent of total SMSF assets.

"We know that SMSF trustees are interested in investing in international markets, however many feel they don't have the level of knowledge or experience required to invest overseas directly. A managed fund is a good way for trustees to access global markets without the complexity. Reflecting this demand, six out of the top ten managed funds in which trustees invest are international funds.

"Domestic equities continue to be popular for SMSF trustees, with the major banks and Telstra continuing to top the list of most commonly held investments based on dollars invested. For the first time, we've also seen an ETF enter the list of top-ten investments, indicating the increasing use of pooled investments by SMSF trustees," Mr La Greca said.

The trend for SMSF trustees not to renew term deposits has continued during the quarter as a result of low interest rates and unattractive returns.

"Each quarter, we are seeing investments in cash drop to a new record low, which isn't surprising given current interest rates. Despite cash being an important strategy for those nearing retirement, we're continuing to see trustees decide to invest in asset classes with higher returns," Mr La Greca added.

In a positive sign Australians are saving more for their retirement, contribution amounts are increasing significantly, up 92.3 per cent over a two-year period. In December 2014, the average contribution per fund increased to $13,715 per quarter compared to $10,830 the previous year and only $6,585 in the December 2012 quarter.

"The average contribution per fund is a positive sign that people are saving more for their retirement. This increase would also be influenced by the increase of the superannuation guarantee to 9.5 per cent and the effective use of contribution caps," Mr La Greca said.

Despite continued strength in the property market and concerns of an overheated market, borrowing in an SMSF for a property purchase remains stable at 16 per cent, only a slight increase from the previous quarter at 14.8 per cent.

"At the end of December 2014, only 35.9 per cent of all direct property holders had a gearing arrangement in place, up from 34.4 per cent the previous quarter. The average loan amount for property purchases was $263,000 signalling the use of LRBAs by SMSF trustees is stable," Mr La Greca said.

The quarterly Multiport SMSF Investment Patterns Survey covers around 2500 funds, a sample of the SMSFs Multiport administers and the investments they held at 31 December 2014. The assets of the funds surveyed represent approximately $2.7 billion.

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