Overall asset allocation to Australian equities was up only 0.1 per cent to 31.8 per cent, despite the All Ordinaries being up 6.5 per cent in the same period. 

The quarterly Multiport SMSF Investment Patterns Survey covers around 1,900 funds, a sample of the SMSFs Multiport administers, and the investments held at 30 September 2012. The assets of the funds surveyed represent approximately $1.5 billion.

AMP SMSF Administration Head of Technical Services Philip LaGreca said: “Despite strong performance in Australian equities for the quarter, it would seem that experience of prior volatility is making SMSF trustees cautious about further investments in this asset class.” 

The trend wasn’t isolated to Australian shares, with exposure to international equities also increasing just 0.1 per cent to 7.7 per cent, despite an increase of 5 per cent on the MSCI World Index for the same period.  

“Investment in international shares also appears soft due to the strengthening of the Australian dollar over the quarter which put a dampener on the offshore performance,” Mr La Greca said. 

Average SMSF contributions for the September quarter decreased to $8,731 compared to $12,350 the previous quarter which is in line with the trend shown during previous years where the bulk of contributions were generally made during the June quarter. 

The overall allocation to cash for the quarter decreased by 0.2 per cent, mainly due to a decline in the popularity of short-term deposits.  In contrast, the 12 month period has shown an increase in term deposits from 8 per cent in September 2011 to 11.1 per cent in September 2012.  

Fixed interest holdings, however, decreased for the 12 month period by almost 25 per cent to 10.6 per cent, due to numerous cuts in official interest rates for the period. 

“Cash allocations have remained fairly steady since last quarter.  In the last 12 months, trustees are trying to get more bang for their buck by significantly increased use of short-term term deposits.  

“The five interest rate cuts in the last 12 months has reduced the attractiveness of fixed interest, which saw a sharp fall in allocation to this asset class in the quarter,” Mr LaGreca said.

Trustees were not deterred by new stringent rules, introduced over a year ago, for investing in collectable items and personal use assets.  

“Although collectables represent 0.05% of the overall SMSF asset allocation, the asset class showed a considerable increase over the last few quarters. Numerically the number of collectables has increased by 22% and based on value by 20%.  

“These trustees are either confident they will be able to meet the new rules, or have not yet addressed the requirements that will apply after 30 June 2016.  Increased investment in some physical commodities, such as bullion, suggests some clients are still looking for an alternative to cash,” Mr LaGreca said. 

To read the Multiport SMSF Investment Patterns Survey, click here.

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