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Trustees stick solid through COVID-19 hit

SMSF trustees investments COVID-19

SMSF trustees have left the investment mix of portfolios untouched in the wake of the market disruption resulting from the COVID-19 pandemic.

The latest research into SMSF behaviour has shown the majority of trustees have not drastically changed their the make-up of their investments in the wake of the effect the COVID-19 pandemic has had on markets.

The “2020 Vanguard/Investment Trends SMSF Investor and Planner Report” revealed 56 per cent of respondents did not alter their investment portfolios at all over the past year. While this represents a 10 per cent drop from trustees who left their asset class allocations unchanged in 2019, 16 per cent of participants who said they had changed their portfolio mix only adjusted 10 per cent of their fund.

“So around 45 per cent of them say they made substantial changes to their asset allocation in the last 12 months. That’s not hugely high [compared to] the historical average … [which is] in the order of 36 per cent,” Investment Trends chief executive Michael Blomfield said.

“What that does say in many ways is that, if you flip that equation, 56 per cent of people say they did not make substantial changes to their asset allocation. [It shows] actually this is a pretty stable group of people.”

With regard to trustees who have changed their investment mix over the past year, 55 per cent of them adopted a more defensive approach, with 58 per cent of this cohort saying their actions were driven by a negative outlook on Australian shares. Among this group, cash was seen as a safe haven, with 48 per cent admitting they had intentionally increased their cash allocation and another 44 per cent revealing they had sold assets for cash.

Conversely, 29 per cent of SMSF trustees who had significantly adjusted their portfolios took a more aggressive stance to their previous asset allocations. Of these members, 71 per cent said they took this action because they had a positive outlook on the Australian share market. In addition, 47 per cent of these participants revealed their more aggressive stance resulted from being presented with new investment opportunities, with another 46 per cent saying they were more aggressive due to a positive outlook toward overseas equities.

“So you can see there are two very different groups of people in action here and a good portion of the SMSF trustees in Australia have actually taken this as a buying opportunity,” Blomfield said.

The report was compiled from 3156 trustee responses to a quantitative survey conducted online between February and May.

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