International equities up as cash down

Philip LaGreca

Philip LaGreca

International equities have become more attractive to self-managed super fund (SMSF) trustees as historically low interest rates decrease the appeal of cash, according to the latest Multiport SMSF Investment Patterns Survey.

SMSF exposure to international equities increased by 1.6 per cent in the December quarter, driven by new funds flowing into the sector as well as the sector’s overall performance and decrease in the Australian dollar.

Cash has continued to decline to 19.1 per cent of total holdings, down from 24.5 only one year ago.

AMP SMSF Administration Head of Technical Services Philip LaGreca said low interest rates meant SMSF trustees were looking for new investment opportunities to provide good returns.

“The decrease in the cash sector during the quarter is the result of funds being moved into other sectors, specifically International Shares, which rose significantly in the quarter to 10.8 per cent,” Mr LaGreca said.

“Investment in Exchange Traded Funds in particular have grown exponentially in the international equities sector, and has more than doubled in 12 months to 1.6 per cent of total holdings,” Mr LaGreca said.

Asset allocation to Australian equities increased by just 0.1 per cent for the quarter, with the sector showing a decrease in the use of managed funds for the quarter, down 0.6 per cent.

Property holdings remained static over the quarter at 17.6 per cent, with direct property representing 14.1 per cent of the total sector allocation.

Out of the total number of direct properties held by the funds in the survey, commercial property represented 25 per cent of all property holdings and residential property accounted for 75 per cent of property holdings.

Average SMSF contributions for the December quarter increased from $9,417 for the September quarter to $10,829.

The Multiport SMSF Investment Patterns Survey covers just over 2000 funds, a sample of the SMSFs Multiport administers and the investments they held at 31 December 2013. Funds are administered on a daily basis which ensures data is based on actual investments and is completely up to date. The assets of the funds surveyed represent approximately $2 billion.

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