SMSFs established in the past 12 months have favoured higher allocations to cryptocurrency and cash than their established peers, with a desire to choose these types of investments a key driver in the creation of the new funds, according to Investment Trends.
Investment Trends analyst Yigit Gunhan told selfmanagedsuper that allocations to cryptocurrency and cash inside SMSFs established in the past 12 months were also higher than allocations to those assets outside super held by the new trustees.
“One thing that is quite significant compared to the broader cohort of all SMSFs is that newly established funds have a 7 per cent allocation to cryptocurrency compared to less than 1 per cent for all SMSFs,” Gunhan said.
“The other thing we notice in our research is newly established SMSFs are slightly over-allocated to cash and cash products when compared to all SMSFs as their portfolio allocation is 22 per cent compared to 18 per cent for all SMSFs.”
He said the cryptocurrency allocation was higher in comparison to investments in the same asset class held outside super, with new trustees reporting 6 per cent of their non-super money was also invested in digital assets, but this was representative of an increase in the holding of alternative assets by many SMSFs.
New trustees held 5 per cent of their portfolio in assets such as commodities and unlisted, illiquid assets like private equity and private markets investments, but held 12 per cent of their non-super money in the same asset class, and the allocation across all SMSFs had increased from 3 per cent to 7 per cent since 2020, he said.
“This is not surprising because we also see this as an emerging trend among high net worth investors who are showing more interest in private equity markets. Since SMSFs are likely to be high net worth, it is likely they are also increasing their allocation to this ‘all other investments’ category,” he said.
Figures already released by Investment Trends on the sources of information behind new establishments showed online research and word-of-mouth were the key drivers for many new trustees, but their motivations for doing so were the same as trustees with established funds.
“The top three reasons for both cohorts are the same. More control over their investments, which we can interpret as a choice over their investment products and control over asset allocation,” Gunhan said.
“Achieving better returns and the belief they can make better investments than Australian Prudential Regulation Authority-regulated funds, greater transparency over investments and more tax effectiveness were also common reasons for all SMSFs surveyed, as well as newly established funds.”
