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SMSF portfolios remain consistent

The latest ATO statistics regarding the SMSF sector have shown asset allocations employed by trustees have remained fairly consistent over the past five years, dispelling the perception in some quarters these portfolios have increased weightings towards local bank stocks and residential property, according to the SMSF Association.

Analysing the most recent sector statistics released by the regulator, SMSF Association head of technical Peter Hogan noted in the five-year period spanning 30 June 2011 to 30 June 2016 allocations to Australian equities had dropped by 1 per cent and residential property holdings had risen by 0.5 per cent.

“All the evidence suggests SMSF trustees are prudent, investing in asset classes where they have knowledge, or giving the responsibility to a manager where they lack expertise. It’s hardly surprising really – it is their money,” Hogan said.

He pointed out the figures did not support the theory SMSF portfolios lacked diversification across a variety of asset classes either.

“ATO figures show that although there might be a bias towards Australian investments, a lack of diversification across asset classes is typically not an issue,” he said.

“When critics of SMSF trustees’ asset allocation point to a lack of diversification, they often highlight the absence or low allocation to assets such as international equities, forgetting SMSFs are still getting exposure to these assets via ETFs (exchange-traded funds), listed and unlisted trusts, and managed funds.”

While SMSF portfolios had not performed as well as other superannuation funds in recent years, with Australian Prudential Regulation Authority data showing a net SMSF return of 5.7 per cent in the 2015 financial year and a net return for other funds of 8.5 per cent, Hogan said that was no cause for alarm as a longer time frame had to be assessed.

“Based on ATO statistics, for example, for the eight years from the 2007 financial year to the 2014 year, SMSF returns outperformed all other alternative superannuation arrangements for four of those years,” he said.

“These returns do not support the suggestion that SMSF trustees are dangerously out of their depth or incompetent in investing their members’ superannuation balances.

“It also has to be noted that many SMSFs are in pension phase and therefore have more defensive investment portfolios to suit their needs.”

SMSF assets as at 30 June 2016 totalled $622 billion.

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