Diversification across asset classes and sectors was found to be a hallmark of advised SMSF accounts.
A new report on investor trading trends reveals increasing differences in asset allocation between advised self-managed super funds (SMSFs), self-directed SMSFs and non-SMSF investors.
Diversification across asset classes and sectors was found to be a hallmark of advised SMSF accounts identified the SMSF Under Advice report, just released by wholesale trading platform AUSIEX, which provides trading solutions to over 4,400 investment advisers and 1,000 dealer groups across Australia.
“Advised SMSFs are more likely than self-directed SMSF to have holdings in passive ETFs, active ETFs, LICs, LITs hybrids and AREITs than self-directed SMSFs,” found the report.
Brett Grant, Head of Product, Customer Experience and Marketing at AUSIEX, says the report identifies “increasing allocation of advised SMSFs to exchange traded funds (ETFs) – in stark difference to self-directed SMSFs and non-SMSF retail accounts, both of which tend to prefer direct investments in equities”.
Mr Grant adds, “advised SMSFs also tend to be more diversified in terms of the number of unique securities held as well as sector allocations. For example, advised SMSF accounts held 15 securities on average, in comparison to 12 for self-directed SMSFs.
“The extent to which financial advisers can add value to their clients’ portfolios throughout the market cycle was again evident in this year’s analysis,” he says.
Generational differences
The AUSIEX report also identifies differences between generations. “For instance, we found advised Generation X SMSFs allocated significantly more to healthcare stocks than their self-directed counterparts and less to industrials,” Mr Grant cites.
“Advised Millennial SMSFs also allocated significantly more than their self-directed SMSF counterparts to healthcare, as well as industrials, real estate and consumer discretionary stocks.”
Generation X and Millennials were also active on the new account front. The latter’s share of total new trading accounts jumped from 6.7% to 9.8% year-on-year as more people in this age group (29-44 years) reached the point at which they have sufficient assets to justify operating SMSFs.
The growing investing power of Millennials was also evident in the trading patterns of each generation. Millennials had the largest year-on-year increase in trading volumes (up 35.5%) among advised accounts in 2024, compared to Generation X (20%) and Baby Boomers (15%).
Mr Grants says, “it appears evident that younger SMSFs investors may have different trading preferences to their parents, not just because of their stage of life but also due to their familiarity with securities such as exchange traded funds and even cryptocurrency”.
Future investment trends
As for other asset classes, the report identified increased enthusiasm and traded value in cryptocurrency ETFs and crypto-infrastructure ETFs – which more than doubled (218%) across all SMSF accounts in the final quarter of the 2024 calendar year.
Mr Grant adds, “another asset allocation issue which will continue to attract significant industry attention going forward is the phasing out of bank hybrids following the announcement by the Australian Prudential Regulatory Authority (APRA). It will be interesting to see what the investment industry produces as alternatives and what investors will shift towards – and we have already seen some product managers respond with an increase in fixed income ETFs.”
ESG differences
Advised SMSFs also appeared to find ESG characteristics more attractive than other investors, allocating almost 2.7% of their total exchange traded products (ETPs) portfolio value, compared to just over 2% for self-directed SMSFs.
What’s next?
Mr Grant suggests, “as we look ahead into the 2025 calendar year, a federal election, threatened trade tariffs, potential rate cuts and a record high S&P/ASXASX200 SMSF investors, advisers and trustees have much to grapple with.
“However, our analysis continues to paint a picture of advised SMSFs as well-diversified, active, agile and forward-looking investors, well-positioned to navigate challenging conditions and grow their wealth.”
“That said, advisers need to ensure their value proposition is well known and understood, especially considering our data found a year-on-year fall in the proportion of new advised Generation X accounts, when the broader trend – and that on the self-directed side is towards this generation growing in terms of its significance as a controller of overall wealth in the system.”
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