The SMSF Professionals’ Association of Australia (SPAA) and Russell Investments have released their 2013 report, Intimate with Self Managed Superannuation, highlighting the need for trustees of SMSFs to expand their investment horizons and increase portfolio diversification.
The report, released at the SPAA National Conference in Melbourne on 13-15 February 2013, suggests that SMSF portfolio diversity is being hindered by a “wall of cash” (34% of SMSF investments in 2012) and reliance on direct investments in shares, term deposits and property. While large cash holdings helped protect SMSFs during the sustained market downturn, the report notes that cash returned just 4% in 2012, compared to a 19% for international shares.
Russell Investments CEO Asia Pacific, Alan Schoenheimer, said multi-asset portfolios (built to meet specific retirement objectives), should be the key focus for SMSFs looking to gain exposure to a mix of assets. Russell Investments believes financial planners are well placed to educate trustees about the benefits of asset diversification and adaptive asset allocation approaches to adjust for volatile markets and changing circumstances. The study also highlighted the importance for SMSF trustees to consider the most appropriate asset class mix in the decumulation phase (or pension phase). In addition, the report indicated that more trustees are looking for specialist advice around their SMSFs, particularly for tax and compliance issues.
[LTN 31, 15/2/13]