The Age: The $160 billion problem with Australian SMSFs, and how to fix it
ATO data shows SMSFs are heavily invested in property, cash, and shares, with only 1.8% in fixed income, increasing their exposure during market downturns.
In this The Age article, Managing Director Tim Keith highlights the benefits of fixed income investments like private credit, offering higher yields, stability, and diversification to strengthen SMSF portfolios.
Self-managed superannuation funds (SMSFs) in Australia are exhibiting a concerning trend, allocating a significant proportion of their assets towards property, cash and shares, with a significant under-representation of fixed income investments.
This imbalance exposes these retirement funds to heightened vulnerability in the event of a downturn in either property or share markets.
Data from the ATO paints a clear picture of this trend. SMSF assets under management (AUM) rose to $1.024 trillion in the September quarter, with a record $286.3 billion allocated to Australian shares, or around 28 per cent of total SMSF assets, $161.7 billion in cash and term deposits, or around 16 per cent of total assets.
SMSFs investments in direct property totalled $165.2 billion, or 16 per cent of their total assets in the September quarter. However, fixed-income investments accounted for just $11.8 billion of SMSF assets with another $6.9 billion invested in loans - just 1.8 per cent of total SMSF assets.
These figures highlight a stark neglect of fixed income such as bonds, especially considering the substantial assets under management by SMSFs. The current investment landscape underscores the potential benefits for SMSFs of a more balanced approach to asset allocation.
Other articles of interest:
- Money Magazine: Housing shortage to worsen as property prices gain momentum
- SMSF Adviser: Leaving room in SMSF portfolios for high yielding debt investments
