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SMSFs missing opportunities through home bias

Home equity bias typically reflected in SMSF portfolios may mean these superannuants will miss better investment opportunities in both growth and value stocks not listed on the Australian Securities Exchange, according to a global funds management house.

“Notably absent from the local stock market are leading global technology stocks, leading global healthcare stocks, global consumer brands or Asian-exposed high-growth industrial stocks,” Insync Fund Managers said.

The manager explained the time was right to review SMSF portfolios in light of the change in the Australian economy where reliance on manufacturing had decreased and uncertainty over the commodities sector had made the outlook for the local market more difficult to forecast.

In particular, Insync said SMSF trustees should be assessing where the growth in the local market would come from if the mining sector was no longer driving it.

Furthermore, the strength of the Australian dollar was making investment in global equities a more compelling argument, it said.

“With the relatively strong Australian dollar still trading above long-term averages, this offers local investors the opportunity of gaining exposure to some truly exceptional global companies,” it said.

The manager recommended SMSF investors look toward companies on the right side of structural change or that could benefit from innovation as those were the ones most likely to grow faster than their associated economy’s gross domestic product.

“Other opportunities globally will include powerful forces such as the ageing demographics and the healthcare spend and also the rising consumption of the developing world,” it said.

“This is where the work is done to identify these opportunities in a still relatively low-growth environment.”

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