SMSFs turn to low-risk deposits and shares but commercial property still big part of portfolios: ATO report

Self-managed super funds (SMSF) have increased their weighting to low-risk cash and term deposits as well as listed shares, but commercial property remains a substantial part of their portfolios.

The latest report on the sector from the Australian Tax Office (ATO) for the 2010-11 tax year shows declines in residential, non-residential property and listed property trusts investments as a proportion of assets held in SMSF portfolios.

SMSFs directly invested 78% of their assets, mainly in cash and term deposits and Australian-listed shares (a total of over 60%). While smaller SMSFs tended to favour cash and term deposits, larger SMSFs had a greater tendency to invest in listed shares, notes the ATO in its report.

“This is the first time over the three years (going back to 2008-09)  in which holdings of these two asset types (cash and term deposits and shares) have shifted in the same direction,” says the ATO.

“In turn there were small shifts away from all the other assets represented with a sustained shift away from listed trusts occurring over the three years.

“The data confirms the SMSF sector responds to changing economic circumstances.”

 

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Despite the general shift away from property, bricks and mortar remains a substantial part of SMSF investment strategy, with commercial property representing 11% of portfolios and residential property making up 3.5%.

In dollar terms, SMSFs have invested $48 billion in commercial property, $14.7 billion in residential property, $17.8 billion in listed trusts and $37.2 billion in unlisted trusts.

Listed shares account for nearly a third of SMSF assets (32%), followed by cash and term deposits (29%).

Listed trusts make up 4% of portfolios, and unlisted property trusts 8.8%. Many of these are property-related.

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The latest report shows that growth in SMSFs numbers continues.

Between the years ended June 2008 to June 2012 SMSF numbers have grown from almost 376,000 to over 478,000, representing growth of over 27%.

There are 913,550 members in the SMSF sector, almost 8% of roughly 11.6 million members in Australian super funds.

Collectively they hold $439 billion in assets.

Over this four-year period, the average assets of SMSFs grew by 12% to $963,000.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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