SMSF holders move away from cash deposits after rate cuts

Self-managed superfund trustees decreased their cash holdings in favour of fixed interest and direct property investments after rate cuts in the December 2012 quarter, according to the latest Multiport SMSF survey.

Cash holdings fell 1.9% to 24.5% of total SMSF investments over the December quarter while fixed interest holdings increased 0.6% to 11.2% and direct property investment went up 1.1%.

Property now makes up nearly a fifth of SMSF portfolios (18.9%) compared with 17.6% a year ago.

“With cash losing its appeal in the wake of two interest rate cuts for the quarter, SMSF trustees are looking for a new ‘safe’ home for their investments,” AMP’s Philip LaGreca says.

Growth in the allocation of funds to Australian equities by SMSFs was higher than expected over the calendar year. Most SMSF deposits are concentrated in ASX Top 20 companies which outperformed the All Ordinaries by 22% this year.

The survey looks at 1,900 funds, a sample of the SMSFs Multiport administers and the investments they held as of December 31 2012.