SMSF cash continues to decline

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Cash investments in self-managed super funds have declined for the fifth consecutive quarter, largely due to a decrease in short-term deposits.
 
According to the latest Multiport SMSF investment patterns survey, cash investments have declined 1.1% from the June quarter and 5.8% from the September 2012 quarter.
 
Lower interest rates is making term deposits less attractive, AMP SMSF technical services administration head Philip LaGreca said.
 
“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% 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 are being favoured way by trustees to seek yield this quarter, with a 0.2% increase on the previous quarter, LaGreca said.
 
Property remains a core investment, however overall allocation fell slightly, from 18.1% in the June quarter to 17.6%. Direct property accounts for 91% of all SMSF property holdings.
 
“Around 38.7% of all direct property holders had a borrowing arrangement in place, compared to 16.7% 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,” said LaGreca. 
“Overall though, property allocation is being out-stripped by growth in other sectors, mainly due to performance.”
 
The overall allocation to Australian equities increased from 37.5% to 39.4%, but this is in line with the increase in the market. It 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, LaGreca said.
 
Managed funds fell 0.9% for the quarter, most likely because managed funds are based on specific sectors rather than diversified and so not increasing in line with the index, said LaGreca.
 
“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.”
 
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.
 
 

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