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.
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