The latest SuperConcepts “SMSF Investment Pattern Survey” has provided tangible evidence that the 2016 federal budget’s proposed super changes are having a significant effect on SMSF trustee’s confidence in retirement savings, with a drastic fall in contributions in the June quarter.
The figures showed the average contributions to an SMSF fell 38 per cent when compared to the June quarter in 2015.
“The June quarter, which is normally the highest quarter of any year, was still the highest for this year but it was the lowest amount we’d actually ever seen for a June quarter,” SuperConcepts executive manager technical and strategic solutions Phil La Greca revealed.
“Obviously the uncertainty of these measures have had a major impact on that so there were people holding back in terms of making contributions in that period.”
The study also revealed SMSF trustees are moving portfolio allocations towards property and cash at the expense of both international and Australian equities.
Statistics from the survey showed SMSF holdings of international shares dropped from 14.1 per cent to 13.1 per cent over the 2016 financial year with allocations to local equities reflecting an even more significant fall from 37.1 per cent to 34.5 per cent of portfolios.
“We have seen a continued trend through the year of people moving away from the Australian equities space,” La Greca said.
“It has fallen particularly away from the top 10 [stocks] still concentrated there [but] it’s down to about 14 per cent of the pool of money whereas at the beginning of the year it was about 17 per cent and the year before was at 20 per cent of the money.
“It has basically shown trustees are actually looking for value; they’re actually trying to find something that will give them not just a cash flow return but also some growth.”
According to La Greca, direct property holdings have remained stable but interest in other sectors of the asset class has picked up.
“We are seeing a little bit of interest in indirect property: so using structures, whether that’s syndicates, trusts et cetera to find a way of accessing property and also by using structures to deal with the problem of property, which is that it’s lumpy and illiquid,” he explained.
The survey showed property allocations in total rose from 18.3 per cent to 21.7 per cent over the 12 months to 30 June 2016.
Despite the low interest rate environment, cash holdings also climbed slightly for the period from 17 per cent to 18 per cent.
“We’ve seen trustees increase the amount of cash they have invested in short-term term deposits, climbing from 4.7 per cent to 5.5 per cent over the year,” La Greca said.
“With current interest rates on term deposits providing little returns, the move to cash could mean investors are feeling less confident in the stock market.”
Last week, SuperConcepts announced it had acquired Reckon’s Desktop Super platform for $2.5 million.
The deal will see approximately 16,000 SMSF software clients transition over to the SuperConcepts business, propelling its market share across both administration and software services from 6.8 per cent to 9.7 per cent.
SuperConcepts and Reckon have also established a strategic partnership to leverage each other’s expertise and industry relationships.
“We’re excited to form an alliance that will help us to enhance the level of service and technology available to SMSF trustees and their advisers,” SuperConcepts chief executive Natasha Fenech said.
“SMSF software continues to be a key part of our strategy and we will continue to invest in the technology as we expand our service to become a market leader in SMSF software solutions and partner of choice for the SMSF industry.”
Desktop Super customers will not notice any immediate change to the way they access their funds.
