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Growth assets an SMSF priority

SMSF capital growth

Maximising capital growth has become more important than ever before to SMSF trustees, the latest sector research has shown.

The latest sector research has shown SMSF members are more focused than ever before on maximising capital growth to rebuild their fund’s investment portfolio after the negative effect the coronavirus pandemic has had on markets.

The “2020 Vanguard/Investment Trends SMSF Investor and Planner Report” revealed 30 per cent of trustees surveyed said maximising capital growth was their main goal in selecting investments over the coming 12 months.

This compares to 22 per cent of respondents who named this as their main focus in 2019 and 23 per cent providing the same answer in 2018.

Investment Trends chief executive Michael Blomfield said this shift in sentiment can be attributed to two main factors.

“Number one, it’s a response to a marketplace where values have fallen and so clearly that generates a desire to catch back up,” Blomfield noted.

“But secondly, what we can see fairly consistently in the background of this data is the typical view that when markets fall, a smart investor buys.

“And so they have participated in the recovery and still maintain on balance a slightly more growth-oriented view for their [fund] than a defensive one.”

The study indicated equities are the preferred asset class trustees will be turning their attention to as the avenue to grow their capital.

“[If you look at] Australian shares, 37 per cent [of participants] say they intend to increase their exposure to Australian shares versus 6 per cent who intend to decrease [this type of holding],” Blomfield noted.

“So [there is] a 31 per cent net intention to increase [their exposure to] Aussie shares.”

Sentiment in relation to increasing allocations to international shares showed a similar but slightly less dramatic trend, with 23 per cent of SMSF members surveyed admitting an intention boost their holdings in overseas stocks, with 5 per cent of respondents expressing a desire to reduce the number of global shares they held in the fund’s portfolio.

While the data revealed this focus on maximising capital growth, it also uncovered a lack of exposure to fixed income instruments in SMSF portfolios.

The report’s findings are based on the collated responses from 3156 trustees to an online survey conducted between February and May.

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