Self-managed superannuation fund (SMSF) trustees are searching for more diversification options to reduce their exposure to the Australian sharemarket following recent volatility, according to new research by AMP Capital.
Forty-six per cent of SMSF trustees surveyed by Investment Trends for the research said they had significantly changed their asset allocation during the past 12 months, with 30 per cent of this group wanting to diversify their portfolio and a further 30 per cent taking a more defensive strategy.
Reduced confidence in the Australian sharemarket is highlighted as an underlying driver of the change, with 25 per cent of trustees saying they negatively view Australian shares, compared to only 11 per cent in 2015.
While adopting a new investment approach is a focus for trustees, they continue to be time poor, spending an average of 3.4 hours per month researching and selecting their SMSF investments, a decline of 8 per cent compared to 2015.
AMP Capital Head of Self-Directed Wealth and SMSF Tim Keegan said: “We’re seeing an increasing number of trustees wanting investment options that improve their fund’s diversification. However, 83 per cent of investors say they face difficulty managing their SMSF, including a lack of time to research and select the right investments.
“We know the real difference financial advice can make to SMSF trustees who are looking to improve the management of their fund. Our research found that 61 per cent of trustees are open to seeking professional advice, which has increased from 46 per cent in 2015.
“We’ve produced the 2016 AMP Capital Black Sky Report to provide financial advisers with additional insight and knowledge of where SMSF trustees are looking for specific advice. Our research found selecting the right investment is the top concern for 35 per cent of trustees while 31 per cent would like to receive advice on investment strategies and protection.”
In other findings, the research revealed an increase in investments in commercial property and infrastructure funds as trustees continue to diversify their investment mix. The majority (51 per cent) of SMSF trustees now use managed funds, which is up slightly from 49 per cent in 2015.
“Trustees are telling us they are interested in managed funds as they can hold unique investments that are otherwise unavailable to retail investors, such as global infrastructure and property. Eighty-nine per cent of trustees in the survey said access to these investments and the diversification benefits were their top reasons for wanting to invest in a managed fund,” Mr Keegan added.
Twenty-seven per cent of SMSF trustees plan to invest in managed funds during the next 12 months, with 32 per cent open to the idea of using the ASX’s mFund Settlement Service to access this.
The research is based on a quantitative online survey of nearly 500 AMP Capital SMSF investors conducted by Investment Trends.