SMSFs account for 1/3 of the money invested in the superannuation system but trustees seem to be not very defensive with their asset allocation. Whilst the SMSF sector seems to be heavily concentrated indirect property and equities, trustees should consider a prudent asset allocation that reflects the member’s risk profile that aims to invest in assets that have a negative correlation to each other in case of volatility is a particular sector.
Whilst SMSFs come with unique benefits and options to members, who have to be more knowledgeable (as trustees), such as flexibility and ability to invest in direct assets they (trustees) still need a level of education which seems to be lacking. This makes SMSFs possibly risky for the trustee/members.
Information from the ATO indicates the asset allocation for SMSFs across the country consists of circa 30% in Australian shares, 25% in cash or equivalent, circa 4% in direct residential property and approx. 11% in commercial direct property with a few point variations and whilst while cash served well throughout the GFC, it may not be the same in today’s market cycle. Diversification is always a good idea and trustees should still seek financial advice from non-bank (or product) aligned advisers.
For more information about SMSF and investments in Australia, contact a Specialist to discuss your particular circumstances.
Chan & Naylor Group has national offices in Brisbane and Capalaba in Queensland, Melbourne and Moonee Ponds in Victoria, East Perth in Western Australia, and Bankstown, Parramatta, Pymble, North Sydney, and Sydney in New South Wales.