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SMSF investors to lift global shares allocation

SMSF investors intend to add greater diversity to their portfolios through a larger allocation to international shares in the immediate future, the latest industry research has shown.

The Vanguard/Investment Trends “April 2014 Self Managed Super Funds Report” revealed the proportion of SMSFs that intended to invest in global equities in the next 12 months had almost doubled from a year ago.

Specifically, 22 per cent of those surveyed in 2014 said they were planning to invest in international shares over the next year. That compared to only 12 per cent of respondents indicating that type of sentiment in 2013.

“If you look at what’s changed from the previous year, there is a lot of demand or interest in international shares and those who are interested in international shares are also those who are really interested in ETFs (exchange-traded funds),” Investment Trends senior analyst Recep Pecker said.

“So trustees are saying ‘I want to hold direct international shares, but where it’s too hard I want to use ETFs instead to get that exposure’.”

Vanguard Australia head of market strategy and communications Robin Bowerman said SMSF investors’ increased appetite for overseas shares was a positive, but he was wary about the motivating factors behind it.

“From Vanguard’s perspective, we think the desire to invest overseas is a great thing for SMSFs to actually do, but we just worry why they are doing that now,” Bowerman said.

“Could it possibly be because the US market went up 42 per cent last year? So are they actively chasing past performance?

“We like the idea that people are more concentrated on diversification, getting more into international shares through ETFs, that’s terrific. We just worry about what the real motivation is.

“Is it from an asset allocation point of view or is it actually chasing those performance numbers?”

While the increased desire to invest in international equities was a significant development, domestic blue-chip stocks and high-yielding shares remained a priority among SMSF investors, with 71 per cent and 34 per cent of respondents expressing the intention to invest in those assets in the next 12 months respectively.

The survey of SMSF investors was conducted online between March and April with 2163 individuals participating.

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