Trustees dump top 10 domestic equities

SuperConcepts latest examination of SMSF data has shown trustees are continuing to unload their investments in Australia’s top 10 listed equities due to worse-than-expected performance.

The firm’s analysis of investment patterns in the fourth quarter of 2018 showed out of the total SMSF assets held, the top 10 listed securities represented 11.6 per cent of total investments, down from 11.9 per cent during the June quarter 2018.

According to SuperConcepts national manager of technical solutions Phil LaGreca, SMSF trustees have gradually decreased their exposure to the top 10 listed securities during the past few quarters.

“Australia’s top 10 equities have experienced declining value in 2018 because half of the list is comprised of banks and their bad fortunes have dragged down the entire index,” LaGreca said.

The top 20 stocks generated a return of 0.05 per cent for the third quarter of 2018 compared to the rest of the All Ordinaries index at 0.57 per cent.

“This has led SMSF trustees to look for opportunities in mid-caps experiencing the middle of their growth curve because they’ll generally show greater growth in profits, market share and productivity,” LaGreca said.

“You can outperform the index if the top 10 goes bad and you’re not tied to their performance, which is why we’re seeing SMSFs using boutique value managers who tend to not follow the index and stay agile.”

The top 10 shares represent just under 33 per cent of all trustees’ Australian equity holdings.

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