Business News

SMSF investors continue to shun cash

The latest Multiport data analysis extracted from the SMSF portfolios it administers has revealed the move away from cash investments is a lingering trend.

The “Multiport SMSF Investment Patterns Survey” for the 2013 September quarter showed cash holdings since the June quarter had fallen a further 1.1 per cent, marking a 5.8 per cent reduction since September 2012. The trend also meant cash investments among SMSF trustees had now declined for a fifth consecutive quarter.

“Cash has continued to fall out of favour with SMSF trustees, mainly due to a decrease in short-term deposits, which have fallen 0.6 per cent over the quarter,” AMP SMSF administration head of technical services Philip La Greca said.

“As term deposits mature, the trend indicates they are not being rolled over as interest rates remain low and trustees look to other assets in search of higher returns.

“Hybrids have been a favoured way for trustees to seek yield this quarter, seeing an increase of 0.2 per cent on the previous quarter.”

Investors seemed to favour Australian equities as the asset class to replace cash, with a jump in allocations from 37.5 per cent to 39.4 per cent. According to Multiport, that was likely to have occurred due to an increase in the value of the domestic share market.

International shares did not attract as much interest as their domestic counterparts though.

“Over the quarter we’ve actually seen a fall in allocations to international equities, when they should have gone up in line with the indices, suggesting some trustees have reduced their exposure as a result of uncertainties in the US market over the period,” La Greca said.

Like cash, property allocations also fell slightly for the quarter, going from 18.1 per cent in June to 17.6 per cent in September. Direct property, however, remained the preferred avenue for the asset class, accounting for 91 per cent of investments.

In other statistical news, Australian Prudential Regulation Authority figures reflected growth in SMSF assets of $24.2 billion or 4.8 per cent for the 2013 September quarter.

The full-year comparison painted an even stronger growth picture, reflecting an increase in assets of $76.5 billion or 16.8 per cent.

According to SMSF Professionals’ Association of Australia chief executive Andrea Slattery, the data indicated the strength of the SMSF sector and that individuals continued to want to control their retirement incomes.

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