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$6b of SMSF cash on the move

Recent CoreData SMSF research has shown as much as $6 billion will be on the move from cash trusts over the next 12 months as trustees look to rebalance their portfolios into more active investment classes.

The study also identified the areas the redistributed cash was likely to be channelled towards.

Overwhelmingly the funds, about 70 per cent by value, had been earmarked for investments in Australian equities, with no other asset class coming close.

However, there appeared to be little chance Australian share funds, exchange-traded funds or model portfolios would benefit from the rebalancing as trustees overwhelmingly indicated they would be making the investment directly and most likely via an online broker.

The research also revealed about a quarter of the cash in SMSFs had been held for more than seven years, an indication it had formed part of a medium-term risk reduction strategy, and was starting to unravel as share portfolios and share funds began to outperform.

“One of the big beneficiaries of the drive to cash in the past five years post-global financial crisis were cash trusts as SMSF trustees actively avoided the volatility of the share market, opting for the certainty of stable and relatively high cash returns,” CoreData said.

“However, as cash rates fell and investors became increasingly confident as volatility in share markets relaxed, SMSF trustees were starting to reconsider how much they held in cash.”

Furthermore, the research revealed the growth in SMSFs was starting to move into its next phase, although it was still being somewhat slowed by the uncertainty around regulation in the sector.

The new segment of SMSF investors would consist of those who had the advantages explained to them by their accountant or were seeking a relationship with one of the larger and more recognised service providers in the market, CoreData said.

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