One-third of ETF inflows still from SMSFs

ETF inflows SMSFs

Investment in exchange-traded funds (ETF) held by SMSFs has remained steady accounting for a third of inflows, according to the latest industry analysis.

The latest industry research into exchange-traded funds (ETF) has shown SMSFs continues to account for around one-third of the fund inflows into these offerings.

The “BetaShares/Investment Trends Australian ETF Report 2019” indicates 30 per cent of all allocations to ETFs came from SMSF investors, that is, of the total 455,000 holdings, 135,000 were held by this segment of the superannuation market as at August this year.

The statistics demonstrate SMSF investments in ETFs remained stable over the 10 months to August, with the sector accounting for 31 per cent of inflows to these products as at October 2018.

“This is not because SMSFs have lost interest, that number [of SMSFs investing in ETFs] continues to grow, but as these products have absolutely mainstreamed, the percentage of holders who are SMSF trustees has been diluted,” Investment Trends chief executive Michael Blomfield said.

Blomfield pointed out the main reasons for investing in ETFs have not changed, but they have intensified over the past year.

“So diversification, low cost and access to overseas markets, and a bunch of others in fact; these [reasons] still remain the top three, but they are even more important as the top three,” he said.

The desire to diversify among investors across a range of asset classes has increased substantially due to pessimistic return expectations, he said.

While the number of ETFs held within SMSFs is now lower as a percentage of the total number of allocations to the market, BetaShares chief executive Alex Vynokur suggested the evolution of the product range will continue to make ETFs appealing to trustees of these super funds.

Vynokur used BetaShares’ new range of ETFs, providing asset allocations covering strategies and outcomes such as conservative income, balanced, growth and high growth, as an example.

“We certainly think for SMSF investors, especially those that are getting a little less involved in investments day-to-day, a diversified ETF like this could be a really good core that they can use,” he said.

“They can still remain active, they can still buy their property and they can still pick their favourite shares if they want, but anchoring their portfolio in a diversified way like that at this price point [26 basis points a year] definitely has a lot of appeal,” he noted.

The report was compiled via two quantitative online surveys of financial planners and current and future ETF investors, resulting in 4271 responses in total.

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