SMSF investors are becoming increasingly comfortable with more exotic equity instruments as low volatility boosts investor confidence to seek new opportunities, according to National Australia Bank (NAB).
Nabtrade data released today revealed appetite for equity investing among Australian SMSFs rose in 2017, with international shares, domestic exchange-traded funds (ETF), mFunds and partially paid shares the most popular investment picks for investors.
The nabtrade data, which examined equity trading patterns of SMSFs in the 12 months to 15 December, revealed these investors had almost tripled their investment in mFund and raised their holdings in ETFs and partially paid shares by 55 per cent and 51 per cent respectively.
SMSF investors also favoured preference shares, with holdings up 34 per cent, while traditional equity holdings were up 13.5 per cent. However, SMSFs resisted investing in floating rate notes and options over the same period.
NAB director of SMSF and investor behaviour Gemma Dale said SMSF investors were very active in equity markets in 2017, with portfolios up more than 15 per cent on the previous year.
“The analysis shows that investors are getting comfortable with the more exotic equity instruments in the market and are prepared to spread risk,” Dale said.
“Low levels of volatility and the strong performance of domestic and international markets gave investors confidence to look for new opportunities.”
SMSF investors were becoming increasingly confident in international equity investing and were willing to venture into new and innovative sectors, such as robotics and aerospace, using ETFs, Dale said.
“International trading surged nearly 100 per cent over the previous year, with US equities and US ETFs the most traded equity instruments on international markets throughout the year,” she said.
“Like retail investors, SMSF investors are turning to offshore markets to diversify their portfolios and to access high-growth sectors in the US.”
Financials and materials were the most heavily traded sectors, similar to previous years, accounting for 36 per cent and 17 per cent of the turnover in 2017. NAB, Commonwealth Bank of Australia and Telstra were the most traded stocks in 2017.
Other popular stocks included those in the telecommunication services, healthcare and consumer discretionary sectors.