An analysis of SMSF portfolios has
shown a different approach between total SMSF Trustees and those advised by
financial planners.
Trustees advised by planners tend to have
more diversified portfolios, according to CoreData research. They have higher
allocations to international shares, fixed income and property. Advised SMSFs
have more than twice the amount of fixed income (11.1% compared to 5.2%) and
10.9% allocation to international equities, compared to 5.6%.
SMSF Trustees are favouring Australian
equities, with 49.7% share. Advised Trustees are slightly lower at 35.2%.
One consistency between the two groups has
been the high allocations to cash and term deposits within SMSFs (versus the
larger super funds). “This high allocation has been an effective technique for
SMSFs to reduce their volatility while maintaining returns through the historic
competitive returns of both cash and term deposits in Australia,” says CoreData
senior consultant Angus Dennis. “Now though, a changing market environment is
leading to a review of this strategy.”
He says the shift away from cash and term
deposits will require careful consideration by advisers and Trustees alike, to
achieve an outcome most suited to individual retirement needs.
Fortunately, insurance within SMSFs has
increased from the 13% indicated at the time of the Cooper Review in 2010, to
27% now. This was due to Trustees viewing insurance in SMSF as “financially and
tax efficient”.
WP
Wealth
Professional
Indices:
The
Australian All Ordinaries Index has moved down decreasing -174 points (or -3.5%) since closing last
Friday to 11:40 am today.
The
rest of the world as measured by the MSCI index decreased -1
point (or -2.4%) in A$ from closing last Friday to end of trade
Thursday.
Have
a great weekend,
The Team at IPS
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