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