SMSF movement into international equities remained sluggish and was likely to stay that way, despite industry reports that interest in international investment was continually growing, according to Sharesight.
The latest data pulled from the online portfolio management tool last Friday revealed that of the 25,000-plus investors using the site, SMSF portfolio weighting to international shares was less than 20 per cent.
“Our user base skews towards the more sophisticated investor as they seek to use something like Sharesight and with our regular, intermediate-type investors, 14 per cent of those portfolios have an overseas holding,” Sharesight chief executive Doug Morris told selfmanagedsuper.
“Compare them to SMSFs, it is more around 18 per cent.
“Considering the number of portfolios we’re looking at, that’s quite a significant difference.
“And while there’s more exposure to global stocks for SMSFs, certainly it’s still not what it should be, which is around 50 per cent or 60 per cent, according to some research houses.”
Morris said it was unfortunately a slow-moving situation.
“The other thing is that you’ve got to factor in demographics, the average age of the SMSF trustee and were they are in terms of the retirement spectrum,” he said.
“I think if you’re worried about funding your retirement, you might pull back towards home and be in cash, et cetera.”
More than a quarter of Sharesight’s retail base in Australia used it for their SMSF and were more of an active SMSF trustee, he said.
“But across Australian portfolios, the 40 most popular portfolio holdings were ASX-listed companies, which was a shock to me,” he said.
“I expected maybe 10, 12 or maybe 15.
“It’s an indication of strong home country bias and while I think the investment community recognises that this is an issue and people are trying to diversify, it’s so hard for investors to buy stocks from overseas because it’s still really expensive.”
The barriers to international investing were purely mechanics and logistics, he said.
“It comes down to the structure of it – transacting in overseas stock costs about $100 a trade,” he said.
“The parallel is somewhat like wire-transferring money overseas – people just don’t know how to do it.
“So it’s all about access and what you can tap into.”
He added that he expected the cost of buying overseas stocks would fall, as he had already noted some share traders only charging a fraction of the average cost.
The ASX’s mFund represented a really good opportunity for investors, but it was still not that well known in the market, he said.