SMSF assets hit record $557bn – exposure to ETFs growing

Arian Niron

Arian Neiron

The assets of Australian self-managed superannuation funds (SMSFs) surged in value to a record $557.1 billion in the June 2014 quarter, according to ATO data released last week, creating a huge opportunity for the local exchange traded funds (ETF) market to attract funds from this sector, according to Arian Neiron, Managing Director of Market Vectors Australia.

SMSF investment into listed shares increased to $177.6 billion in the June quarter, up from $174.8 billion in the March quarter accounting for around one third of all SMSF assets. Another $20.7 billion was invested in listed trusts (including ETFs) in the June quarter, up 2% from $20.3 billion in the March quarter.

SMSFs continue to amass record amounts into cash investments, which rose to a record $157.9 billion during the June 2014 quarter, up 1.7% from $155.3 billion in the March 2014 quarter. Those cash holdings represent 28% of all SMSF assets.

“SMSFs should consider investing greater amounts of their assets into ETFs, which are convenient, cost effective vehicles offering growth and diversification opportunities,” Mr Neiron said.

“Statistics show that SMSFs are increasing investment into listed trusts, such as ETFs, but there’s still a lot more work to be done.  ETF providers need to address the lack of awareness about the benefits of investing in ETFs to the SMSF sector, which is still largely sticking to the safety of cash.

“Many SMSF trustees are not aware how ETFs are creating new and easily accessible investment opportunities on the ASX. ETFs are ideal tools for SMSF trustees to build cost effective, diversified portfolios in asset classes such as international and Australian shares.  ETFs also offer flexibility to SMSF trustees,” Mr Neiron said.

Market Vectors recently launched an education microsite designed to provide a holistic overview ofinvesting in ETFs to help Australian advisers and investors better understand and navigate the ETF industry.

“We are fully committed to engaging with SMSF trustees and their advisers to help them better understand what comes with investing in ETFs. The ETF industry, like Self-Managed Superannuation, has come a long way and we hope both industries continue to grow. Education is a key part of that growth,” Mr Neiron said.

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