CMC Markets Stockbroking’s most recent data analysis on its SMSF clients has shown diversification remains an issue, with trustees on average holding only four types of securities, mainly blue-chip shares.
“The average holding being four I think is very low in terms of having a balanced portfolio. That did shock me,” CMC Markets Stockbroking head Andrew Rogers told selfmanagedsuper.
Despite the low average holding, Rogers said the portfolios were still actively being traded.
“They’re not necessarily sitting on four stocks. It sounds simple and less sophisticated because there are only four stocks, but the rotation of the stocks is happening,” he said.
“So they’re being smart. They’re looking at what’s available in the market and they’re rotating their holding for the dividend, which is important.”
The online broking house’s analysis revealed the average SMSF held $322,599 in listed shares, with the top five stocks traded being Telstra Corporation, Westpac Banking Corporation, BHP, National Australia Bank, and Australia and New Zealand Banking Group.
“It was no surprise Telstra came out first for SMSFs, given the yield of those securities. Next came the banks and it was not based on size of trade, just the number of times these stocks were bought and sold, and then all the majors, which is no surprise,” Rogers said.
“What was interesting is the risk appetite for SMSFs is actually quite low. So they’re buying the majors and they’re not looking for massive capital growth that, say, a penny mining stock might provide; they’re looking for yield.”
In regard to sectors, materials were most favoured among SMSF investors, with 25.16 per cent having an allocation to these industries, followed by banks, diversified financials and insurance, with investment by 17.51 per cent of SMSF trustees, with energy next, attracting 9.81 per cent of SMSF investors’ money.
The data analysis also showed the effect of geographical location on the types of shares SMSF investors were trading.
“We found in NSW financial services, that is the banks, were very popular, whereas in Queensland it was more about foods and staples, and in WA materials were favoured,” Rogers said.
“Our conclusion from this was maybe people like to invest in what they know. So our hypothesis is what’s driving SMSF investment decisions is what they’re comfortable with and what works for them. And these are established SMSF clients.”
CMC Markets Stockbroking was monitoring ongoing developments in the SMSF investment space to see if trustees would soon show a little less risk aversion and start looking at other sectors of the equity markets, he said.
“If this does occur, the potential volumes we’re talking about may have a material effect on pricing and the weightings of the ASX 200 benchmark. So it’s a space we’re watching with great interest,” he said.
The company is aiming to become more interactive with SMSF advisers and practitioners, in particular accountants, and to this end it has now established a data-feed arrangement with Class Super.
It is also working closely with software specialist BGL and portfolio management software provider Sharesight to increase its interaction with SMSF professionals.
