Despite recent downturns in the domestic share market, self-managed super fund (SMSF) trustees have increased their investments in Australian equities to boost long-term gains, while cash holdings continue to decline to a record low, according to the latest Multiport SMSF Investment Patterns Survey. In the September 2014 quarter, cash holdings within SMSFs continued to fall by another 1.3 percentage points to 17%, representing the lowest level since the Multiport survey began in 2007. Conversely, investment allocation to Australian equities increased by 1.5 percentage points signalling funds have flowed from cash to this asset class. AMP SMSF Administration Head of Technical Services Philip La Greca said low interest rates continue to make cash less attractive as an investment, resulting in trustees not renewing term deposits at maturity. "While overall cash holdings are declining, it's term deposits that have seen the biggest decline as an investment vehicle over the past 12 months, reducing from 7.6% in September 2013 to 5.3% in September this year. With no sign of term deposit rates increasing in the near-term, we'll likely see cash holdings continue to decline," Mr La Greca said. "In previous quarters we have seen investors move their funds to international equities to realise more gains, however over the past quarter the majority of funds have been moved from cash to Australian equities, which now accounts for 41.8% of overall asset allocation. Despite a recent downturn in the domestic market, it appears SMSF trustees are overall optimistic about long-term gains in Australian equities," Mr La Greca added. The allocation to international shares has also remained consistent at 11.7% of overall assets, with managed funds continuing to be the preferred method in investing of investing in overseas markets due to the complexity of direct investing overseas. Interestingly, the asset allocation to property declined 1.5 percentage points in the past quarter despite the popularity of property purchases in an SMSF. The overall asset allocation to property in an SMSF, including direct, listed property and within managed funds now sits at 16.3%. "Around 14.8% of SMSF trustees are currently using a borrowing arrangement in their SMSF, a slight decline from 15.6% in the previous quarter. The portion of SMSFs with direct property investments that are using a Limited Recourse Borrowing Arrangement also declined by 3.1 percentage points to 34.4%," Mr La Greca said. In a positive sign Australians are saving more money for their retirement, the average contribution for the September quarter reached $12,125, which is much higher compared to previous years with $9,417 for September 2013 and $8,732 for September 2012. "The increase we've seen in contribution levels is most likely the result of the increase in the Super Guarantee to 9.5% and indexation of both the concessional and non-concessional contributions cap," 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 30 September 2014. The assets of the funds surveyed represent approximately $2.6 billion. |
distributed by |