SMSF investors expect lower returns but are positioning their porfolios for growth
Sydney: December 04, 2009
Self-managed superannuation fund (SMSF) trustees are still seeking double digit returns from their investments despite remaining cautious about the outlook for 2010, a survey of DIY and SMSF investors has found.
SMSF trustees lowered their return expectations by 16 per cent from 13.1 per cent in 2008 down to 11 per cent in 2009.
Return expectations for non-SMSF investors fell back to single digits from 12.2 per cent down to 9.2 per cent over the same period.
The research also shows that SMSFs increased their fund contributions over the past year (from 52.7 per cent to 54.2 per cent), and are intending to reduce their exposure to cash (21.7 per cent to 20.8 per cent), fixed income (7.4 per cent to 4.9 per cent) and managed funds (22.5 per cent to 18.6 per cent).
Allocations to investment property only fell marginally by comparison (16.5 per cent in 2009 to 16.3 per cent).
When asked why they made these changes, SMSF trustees sought better returns (56 per cent), while non-SMSF investors wanted to reduce volatility (55 per cent).
Compared to 2008, all investment types are being less considered compared to 2008, but cash (64 per cent) and shares (63 per cent) remain the most popular with SMSF trustees, while they are less likely to consider investment property (down to 42 per cent from 64 per cent in 2009).
If given an additional $500,000 to invest, SMSFs would reduce their allocation to super (SMSF and compulsory super) by 48 per cent (down from 60 per cent in 2008), and reallocate to shares, bonds and property. Their remaining allocation would be heavily weighted (38 per cent) to shares.
RaboPlus Investments Manager Tim Hewson said: "Despite claims that allocations to super would fall if given the time to properly analyze their portfolios, the research clearly shows that SMSF trustees have increased their allocations over last year with a significant appetite for growth assets like shares."
Mr Hewson said the survey showed many SMSF trustees were unhappy with their current investment allocation, compared to the previous year, but were now more inclined to take less calculated risks.
"Not surprisingly, their enjoyment of investing had fallen 10 per cent since 2008," he said.
Nearly double the number of SMSF trustees are consulting financial advisers compared to non-SMSF investors, and 44 per cent have dealt with a financial adviser in the past 12 months.
The top three considerations for SMSF trustees when making investment decisions are long-term gains (69 per cent), low fees (59 per cent), and a strong understanding of the investment (59 per cent).
SMSF trustees making changes to their portfolio were more likely to have followed planning advice, to seek better returns while non-SMSF investors (55 per cent) made changes mainly because of market volatility.
SMSF investors tend to be more cautious and less willing to take risks in 2009 than DIY investors.
The research also shows that SMSF trustees are less likely to involve their partner than they were last year.
The survey, conducted in mid 2009 by Celsius Research, compared return expectations of 503 SMSF trustees and DIY investors.
All those surveyed had portfolios of $150,000 or more, which included superannuation and savings, but excluded the family home. All respondents actively managed their own investments.
