Self-managed super fund (SMSF) trustees find choosing what to invest in the hardest aspect of running their own fund, according to new research by AMP Capital.
Twenty-seven per cent of trustees surveyed by Investment Trends for the research said investment selection was their most difficult task followed by keeping track of changes to SMSF rules and regulations (24 per cent), paperwork and administration (23 per cent) and finding time to research investments (19 per cent).
The vast majority of trustees (76 per cent), however, had made at least one new investment for their SMSF during the last 12 months, while 35 per cent had made between two and five investment changes and 16 per cent had made between six and ten changes.
Thirty-eight per cent of respondents had made a substantial shift in their SMSF’s asset allocation during the same period. Of that number, 24 per cent adopted a more defensive stance, 24 per cent increased diversification, 23 per cent changed their asset allocation because of their positive outlook on Australian shares while 22 per cent wanted their fund to focus more on income.
AMP Capital Head of Self-Directed Wealth and SMSF Tim Keegan said: “More than half the respondents to our survey said they set up an SMSF because they wanted more control of their investments and yet they identify investment selection as their most daunting task. It is also a task they largely do on their own: 44 per cent stated they make all the investment decisions for their fund, 23 per cent said decisions are made together with another member and 17 per cent make joint decisions with their financial adviser. “The research again highlights the opportunities for financial advisers in the SMSF space. There is a segment of trustees who want advice, particularly in relation to finding the right mix of investments in order to meet their goals. The research also found they would like advice on pension and investment strategies, inheritance and estate planning. Based on this research, we’ve produced a guide for advisers entitled Black sky report: the SMSF opportunity for financial advisers, which contains insights to help them capitalise on the potential of this part of the market.”
In other findings, trustees reported that long-term aspirational goals drove most of their investment decisions (41 per cent) ahead of a need to fund additional personal goals (39 per cent) and to meet dayto- day living expenses (37 per cent).
If they felt their goals weren’t being met, 48 per cent of trustees said they would change the mix of investments while 27 per cent would seek advice from a financial adviser.
Mr Keegan added: “As a fund manager, AMP Capital was also interested to see that portfolio diversification was the main reason why trustees intend to invest in managed funds. They are seeking international diversification, access to different investment strategies and access to investments otherwise out of reach. International equities was the most popular managed fund in terms of where trustees are likely to put their money during the next 12 months.
“The Australian Securities Exchange’s mFund Settlement Service is a way for trustees to invest easily in managed funds; AMP Capital is a foundation member and last year we added six of our funds to the service. A sign of mFund’s potential among SMSF trustees is the fact 42 per cent of respondents would like to find out more about it and would be keen to use a service that allows them to purchase managed funds through an online broker, especially those related to actively-managed Australian and international equities.”
The research is based on a quantitative online survey of nearly 1,000 AMP and AMP Capital SMSF investors conducted by Investment Trends. Black sky report: the SMSF opportunity for financial advisers can be downloaded at:
M +61 419 226 449
This article has been prepared to provide general information and does not constitute 'financial advice' for the purposes of the Financial Advisors Act 2008 (Act). An individual investor should, before making any investment decisions, consider the information available in the relevant Product Disclosure Statement and seek professional advice. While every care has been taken in the preparation of this document, AMP Capital Investors (New Zealand) Limited and the AMP Group (together, 'AMP') make no guarantee that the information supplied is accurate, complete or timely and do not make any warranties or representations in respect of results gained from its use. The information is not intended to infer that current or past returns are indicative of future returns. The views expressed are those of the author and do not necessarily reflect those of AMP. These views are subject to change depending on market conditions and other factors.