Self managed super fund (SMSF) trustees continued to decrease their allocation to cash during the September 2013 quarter with lower interest rates making term deposits less attractive according to the latest Multiport SMSF Investment Patterns Survey.
AMP SMSF Administration Head of Technical Services Philip LaGreca said cash investments have seen an overall decline of 5.8 per cent on the September 2012 quarter, making it the fifth consecutive quarter it’s fallen. Since the June quarter cash has fallen 1.1 per cent.
“Cash has continued to fall out of favour with SMSF trustees, mainly due to a decrease in short-term deposits, which have fallen 0.6 per cent over the quarter.
“As term deposits mature, the trend indicates they are not being rolled over as interest rates remain low and trustees look to other assets in search of higher returns.
“Hybrids have been a favoured way for trustees to seek yield this quarter, seeing an increase of 0.2 per cent on the previous quarter,” said Mr LaGreca.
Property remains a core investment, however overall allocation fell slightly over the quarter, from 18.1 per cent in the June quarter to 17.6 per cent. Direct property is still the preferred option, accounting for 91 per cent of all SMSF property holdings.
“Around 38.7 per cent of all direct property holders had a borrowing arrangement in place, compared to 16.7 per cent of the total number of funds who have a borrowing arrangement, showing that gearing continues to be important for those who want to access direct property. Overall though, property allocation is being out-stripped by growth in other sectors, mainly due to performance,” said Mr LaGreca.
While the overall allocation to Australian equities increased from 37.5 per cent to 39.4 per cent, this is in line with the increase in the market and is likely due to a relatively higher concentration of holdings to the top 10 Australian shares, which outperformed the All Ordinaries, rather than new investment.
Managed funds saw a fall of 0.9 per cent for the quarter, likely because managed funds are probably based on specific sectors rather than diversified and so not increasing in line with the index.
Mr LaGreca said: “Over the quarter we’ve actually seen a fall in allocations to international equities, when they should have gone up in line with the indices, suggesting some trustees have reduced their exposure as a result of uncertainties in the US market over the period.”
When it comes to accessing international holdings, 13 per cent were held via Exchange Traded Funds (ETF), which has continued to increase over the past few quarters.
The quarterly Multiport SMSF Investment Patterns Survey covers around 2000 funds, a sample of the SMSFs Multiport administers and the investments they held at 30 September 2013. The assets of the funds surveyed represent approximately $1.9 billion.
