The latest research into SMSFs has shown they have managed the recent investment market turbulence very well and that trustee use of exchange-traded funds (ETF) continues to rise.
Specifically, the 2022 “Class Annual Benchmark Report” revealed SMSFs were not immune to the negative impact of recent market conditions, but were able to manage the adverse investing conditions in a robust manner.
“The performance of SMSFs based on our data [indicated] balances were down in [the second quarter of 2022 by] 5 per cent compared to a broader market of the ASX 200 of 12 per cent during the period,” Class chief executive Tim Steele noted.
“So that in itself, in terms of resilience, is an interesting perspective.”
However, Steele acknowledged there may be an element of delay in the measure of SMSF performance due to the asset class they tend to favour.
“It is important to note, and would be inappropriate not to note, that property is a popular asset class in SMSFs and there may be a lag in valuations on property,” he said.
“Also, as we see the interest rate environments move, we would expect to see continued potential volatility to impact property.”
In terms of investment vehicles, the use of ETFs increased over the period the study covered.
“[The use of ETFs has experienced] the highest growth among all asset classes with a 5 per cent growth from June 2020,” Steele noted.
It was reflected in the report that these types of investment vehicles were most popular among younger SMSF trustees.
“When we talk about a 3 per cent increase, particularly for millennials, it doesn’t sound particularly significant. But if you think about that as an increase from what was circa 7 per cent to just over 10 per cent for that age group of 35 to 44, that is a really material increase in that particular segment,” Steele said.
Further, the development is an indication younger SMSF trustees are using ETFs as part of a broader diversification strategy in their funds.
