Where SMSFs are investing in the year ahead


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Self-managed superannuation funds (SMSFs) are moving away from buying blue-chip shares, high-yielding shares, cash management accounts and term deposits. So what asset classes are they buying?

That question remains one of the top challenges of managing an SMSF, just behind keeping track of changes in rules and regulations.

This year SMSFs are buying global shares, exchange traded funds (ETFs), small-cap speculative shares, listed investment companies, and infrastructure and resources shares, according to the 2018 Vanguard/Investment Trends survey of over 2000 SMSF investors.

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When it comes to cash, SMSFs are looking to place their money in high-interest savings accounts rather than cash management trusts and term deposits.

But the biggest jump has been investing in international shares, with 28% of SMSFs saying they plan to buy global shares in the year ahead, up from 18% last year. Global shares have performed strongly as the US sharemarket has hit a number of successive highs.

While 48% of SMSFs will buy blue-chip shares, this is well down on the 70% in 2014.

SMSFs expect the ASX All Ordinaries to be around 3% higher, after dividends, in 12 months.

Some 23% of SMSF investors will buy exchange ETFs in the year ahead, up from 17% in 2014.

SMSFs hold around 12% in direct property, a level that has remained fairly constant since 2013.

The amount of cash held by SMSFs has declined for the first time since 2009, slipping to $174 billion from $184 billion last year. SMSFs hold around $50 billion in cash that they intend to invest.

When it comes to diversification, the survey found that the majority of SMSFs believe they can achieve it by using a range of shares, with 66% considering a portfolio of 20 individual stocks to be well diversified.

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.