SMSF investors trade less but take larger positions

Confident self-managed superannuation fund (SMSF) investors have taken advantage of reduced sharemarket volatility as they have refocused their portfolios on their preferred stocks, according to CommSec.

CommSec’s latest trading report found that during the first six months of 2017, active SMSF investors traded less often but took larger positions, with the average trade size increasing seven per cent from the previous six months, while trading volumes declined five per cent. The total value of shares traded by SMSFs lifted by nearly two per cent during the same period.

The report noted that the value of shares traded by non-SMF investors declined four per cent, with a two per cent increase in trade size failing to offset a six per cent drop in volumes.

“Even more striking, SMSFs were twice as likely as non-SMSFs to place trades over $25,000 and half as likely to place trades worth less than $5,000,” the report said.

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“However, both groups were more likely to buy than sell over the period, with purchases accounting for 55 per cent of contract notes issues.”

Commonwealth Bank head of SMSF customers, Marcus Evans, said one trend that had not changed was SMSF investors’ strong preference for Australian blue-chips.

“Over the six months to June 2017, ASX200 shares accounted for 60 per cent of all SMSF trades, compared to 54 per cent of non-SMSF trades,” Evans said.

The report also suggested that headline numbers concealed a significant level of diversification amongst some SMSFs.

“SMSFs are often characterised as insufficiently diversified, having portfolios concentrated in cash and large cap domestic equities, but some SMSFs are more diversified than we give them credit for,” Evans said.

“In the current low growth environment, it seems SMSFs have been seeking cost-effective diversification. Our analysis shows an increased investment by SMSFs in hybrids, interest rate securities, and Australian and international exchange traded funds (ETFs).”

On demographics report found that Gen Xs (36 to 45-year-olds) had been the fastest growing SMSF segment in Commsec, making up 25 per cent on active investors.

Over 65s represented 37 per cent of active SMSF investors by number and 40 per cent of trades by value. They were the most likely cohort to trade in parcels greater than $50,000.

“We found that millennial women were much more likely to trade through their SMSFs than their personal accounts compared to men of the same age, noting the sample size of this cohort is small,” the report said.

“What was clear however, was that women aged between 35 and 50 invested nearly one and a half times more in dollar terms in their SMSFs than in their personal accounts – the opposite of men of the same age.”