Multiport SMSF Investment Patterns Survey March 2011

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To get a closer insight into where SMSF trustees invest, Multiport regularly undertakes an analysis of our SMSF’s investments to look at the up to date asset allocation and investment trends which have or may be emerging.

 

The survey covers around 1, 400 SMSF’s that we administer and the investments they held at 31 March 2011.  Funds are administered on a daily basis which ensures that data is based on actual investments and is completely up to date.  The assets of these funds represent approximately $1.25 billion.

SMSF Trustees start utilising limited recourse borrowing arrangements

As the use of limited recourse borrowing arrangements becomes more popular to acquire assets, Multiport has undertaken new research to look at the comparison between borrowing to acquire property versus shares and other financial assets.

Around 13% of the funds in the survey are currently utilising a borrowing arrangement.  The graph below shows the split of borrowing arrangements across direct property and financial assets at 31 March 2011.


The higher weighting to direct property is not surprising as direct property has become a more popular form of investment since the legislation change in  2007 that allowed SMSFs to borrow. The average property loan amount is around $200k compared to $110k against other financial assets.

Increase in International equities exposure

The March quarter saw an increase in exposure to International Equities, while all other sectors remained relatively stable. In the March quarter there was a 23% jump in International equity exposure. Exposure to Australian Equities decreased slightly to 41 % at 31 March 2011, down .4% from the December quarter.

Fixed Interest holdings continued to decrease, with allocations at their lowest point since December 2009.

The overall allocation to property increased from 15.7% to 16.1%, despite a 1% decrease in exposure to Listed Property, Managed Funds & Syndicates, suggesting that SMSF trustees may be taking a more direct approach.

The asset allocation break-up at 31 March 2011 was:

Source: Multiport Pty Ltd

Cash holdings remain stable

Cash holdings decreased slightly to 21.8% in March 2011, down 0.1% from the December quarter.

The average contribution inflow for the quarter was $5,900, compared to benefit payment outflows of $14,500 per fund.

Although cash outflows exceeded contribution inflows, the quarter saw cash holdings boosted by post 31 December distributions and half yearly dividends and therefore provided a stable cash holding outcome.

Australian equities exposure steady


Source: Multiport Pty Ltd

Again we have seen the preference of SMSF Trustees to invest directly rather than through managed funds.

Top 10 Australian Shares

The March quarter saw Woodside Petroleum moving to number 6 in the top 10 Australian Shares, on improving oil prices and takeover speculation, Woolworths moved to ninth spot.  The most commonly held ($ invested) shares at 31 March 2011 were:

Source: Multiport Pty Ltd

SMSF’s continue to have a very high weighting to the Top 20 ASX listed stocks.  On average, these 10 stocks represent 16.6% of all SMSF assets showing the reliance on the four banks and the big miners.

 

International holdings

The March quarter saw International holdings increase to their highest allocation since December 2007.  International holdings at 31 March 2011 were up 1.7% from the previous quarter to 8.8%.  An appreciating Australian dollar could continue to have a counter effect on the performance of the sector so an increase of this size would indicate that new money is being invested in International equities through the use of managed funds.

Source: Multiport Pty Ltd

Property allocation

Direct Property allocations decreased in the December quarter however in the March quarter we have seen allocations rise above previous quarters to 13.7%. The investments in Listed Property Funds, Managed Funds and Syndicates continue to decrease to their lowest allocation of 2.4% at 31 March 2011.

Source: Multiport Pty Ltd

Fixed Interest

Source: Multiport Pty Ltd

Exposure to Managed Funds

The survey has again revealed an 80/20 split of investments with the direct investment approach highly favoured.

Source: Multiport Pty Ltd

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