SMSFs were the largest net investors in the Australian Securities Exchange (ASX) top 20 in 2016 and were the most active investors in the retail segment, according to a recent analysis of CommSec clients.
On average, SMSFs traded 30 per cent more than non-SMSFs, the study found.
“Over the past two years, SMSFs have been more likely to trade during periods of market volatility than non-SMSFs,” Commonwealth Bank of Australia head of SMSF clients Marcus Evans said today.
The analysis also found SMSFs held their nerve during periods of market volatility and were the net buyers of stocks during the August 2015 market downturn, post Brexit and after the United States election.
There were signs, however, that SMSFs had taken a more conservative stance in response to the 2016 federal budget announcement on changes to superannuation, it said.
“While SMSF trading volumes during 2016 remained on par with 2015, our analysis shows a trend towards a smaller deal size,” Evans noted.
“The beginning of this trend correlated with the budget announcement, suggesting SMSFs were more cautious with the investment strategies due to the uncertainty.
“As investors waited to see whether the proposed changes would be legislated by Parliament, they also reduced their voluntary contributions.”
He said in the September quarter, average voluntary contributions to SMSFs decreased significantly from $10,750 to $3040.
Also included in the CommSec analysis were trends around SMSF investment portfolios, where it was shown SMSFs held equities across a broad range of industries, with more than 20 sectors represented.
Bank holdings were the most popular equities, making up more than 32 per cent of SMSF holdings, followed by materials at 11 per cent, telecommunications services at 7.8 per cent, diversified financials at 6.4 per cent and food and staples at 6 per cent.
Banks comprised nearly one-quarter of all trades by value for SMSFs compared to 18 per cent for non-SMSFs, CommSec said.
Materials and energy accounted for nearly another 25 per cent of trades by value for SMSFs compared to non-SMSFs at 35 per cent.
Evans highlighted SMSFs were also showing a move towards the mid to small-cap market.
“While SMSFs were the net buyers of banks and resource stocks over the past 12 months, we have also seen CHESS (clearing house electronic subregister system) holdings of stocks outside the ASX 100 grow by 3 per cent,” he said.
Furthermore, the use of exchange-traded products, such as exchange-traded funds (ETF), listed investment companies and exchange-traded managed funds, to diversify into international equities has remained constant at around 2 per cent of total CHESS holdings.
SMSFs made up about one-quarter of all ETF trades, although ETF activity was down marginally on the previous year, CommSec said.
“One pattern that is emerging is the move from ETFs to direct shares when the market spikes down and specific shares become attractive from a valuation perspective,” Evans noted.
Current SMSF research by SuperConcepts indicated an increased allocation to hybrids by the funds under its administration.
SMSFs made up 50 per cent of hybrid holdings in CommSec and in total those had increased by 18 per cent since August 2015, Evans added.
