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Cash holdings spike amid market volatility

SMSF allocations to cash and term deposits increased almost 3 per cent in the March quarter as investors reacted cautiously to current volatile market conditions, according to the latest analysis from OneVue.

According to the March quarter 2016 results for OneVue’s SMSF portfolio holdings, investments in cash and term deposits rose by 2.7 per cent to 19.9 per cent, compared to the December quarter last year.

OneVue head of product and transactions Brett Marsh said it was the biggest quarterly jump for the asset class in OneVue statistics since 2012, and reversed a declining trend in those asset classes for most quarters since then.

“The timing of this jump coincides with challenging equity market conditions, with a major fall in equity markets last August, followed by an increase in volatility from December to February,” Marsh explained.

“All investors are reacting cautiously amid these global shifts and SMSF investors are no exception.”

Cash and term deposits were now the fourth largest asset class in investments held by OneVue SMSF investors.

The top three were managed funds (unitised trusts), separately managed accounts (SMA) and then listed shares.

In OneVue SMSF investment trends over the past year, managed funds rose to 28.74 per cent in the March quarter compared to 23.09 per cent in the March quarter 2015.

SMAs rose to 25.14 per cent, up from 22.81 per cent over the same period.

In contrast, listed shares dropped to 20.91 per cent in the March quarter, down from 26.42 per cent a year ago, while direct property fell to 7.85 per cent from 9.37 per cent.

Marsh said advisers were continuing to access professional investment management through actively managed and passively managed trusts, in particular asset classes such as international, infrastructure and alternatives.

He said a greater use of professional investment management also continued to be displayed by OneVue SMSF investors.

“SMSFs are recognising the need for good advice and good investment management,” he said.

“The recent performance of popular picks such as resource and banking stocks has highlighted a need for some SMSFs to diversify and see managed funds as more attractive.

“But there is still an overall weighting towards direct assets such as property, cash and term deposits and shares.”

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