Self-managed superannuation fund investors are moving away from direct investments and instead looking to exchange traded funds (ETFs) and managed investments, according to Investment Trends.
The research house’s 2017 SMSF Investor Study found that SMSF investors have been reducing the size of their asset allocations in direct shares. They had gone from committing 45 per cent of their investments to such shares in 2013, to 37 per cent last year.
Instead, they have turned to ETFs and managed investments, both for the ease they offer and out of a desire to diversify their portfolios. ETFs provide an easy and cheap way to add numerous funds from overseas markets to a portfolio.
Looking forward, Investment Trends found that the interest in ETFs and managed accounts was set to continue. While SMSF investors had previously pointed to bluechip, high yielding, small cap and international shares as their focus for the future, they were now leaning toward the former forms of investment.
Some of the money ordinarily invested in direct shares had also been placed in cash. Of the $180 billion SMSFs hold in cash in total, Investment Trends found that $53 billion would ordinarily be invested in market shares. SMSF investors were keeping it in cash while they worked out where to invest it outside of direct shares.
Financial planners also reported that they were increasingly turning to ETFs and managed and indexed funds to invest SMSF clients’ money. The research organisation’s 2017 SMSF Planners Study found that in the last 12 months investment of SMSF funds in managed accounts had doubled, going from five per cent in 2016 to 10 per cent last year.