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SMSFs implementing diversification

The latest CommSec analysis shows diversification among SMSF share portfolios appears to be less of a concern than previously thought, with trustees holding more varied holdings than those of non-SMSF retail investors.

The analysis found while the average equities investor held only seven different stocks in their portfolio, SMSF trustees on average held 14 different equities.

“SMSF accounts tend to be far more diversified than those of retail investors, recognising that diversification is an important part of reducing risks and managing a robust portfolio over the long term,” Commonwealth Bank of Australia head of SMSF customers Marcus Evans said.

In the current market, SMSFs hold equities across a broad range of industries, with banks being the most popular equities, making up more than 30 per cent of SMSF holdings.

This is followed by materials (10 per cent), telecommunications services (7.3 per cent), diversified financials (5.8 per cent) and food and staples (5.7 per cent).

Evans said SMSFs were continuing to grow and diversify their portfolios, however, equities comprised just one asset class.

“To have a truly diverse portfolio, SMSFs need to look across asset classes for broad investment opportunities,” he said.

The analysis also found the number of trades SMSF investors executed was double the amount of those completed by non-SMSF owners.

Evans said SMSFs were very active in the equities space, eliminating the belief self-managed super accounts were dormant with a lot of long-term investments.

“The increase in trading volumes favouring buying during recent volatility shows investors are keeping an eye on the market and dispels the myth that SMSFs are conservative investors,” he said.

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