Key finding of Investment Trends/Morningstar research

More SMSF investors are refocusing on growth assets, including looking offshore to find investment opportunities, according to a new Investment Trends/Morningstar report prepared for the SMSF Association.

Titled the SMSF Investor Product Needs Report and drawing on a survey of 2681 investors with an SMSF, it highlights that there are “green shoots” – SMSF investors beginning to think seriously again about growth.

“For the past few years, the pendulum has been on the fear side; it was moving back towards optimism, but a lot of caution has emerged in 2014,” the report says.

The report, which examines investment trends in the six-year period from 2009 to 2014, says SMSF investors are in a period of cautious optimism – maximising income remains important, but there is more focus on making growth a priority.

SMSF Association Managing Director/CEO Andrea Slattery says this important piece of research helps put to bed the myths that SMSF investors don’t like making decisions, are apathetic, and basically sit on large cash reserves.

“As the report says, SMSF investors tend to lead the general investor population in investing behavior and, as such, it’s critical to watch what they are doing,” she says.

Recep Peker, Senior Analyst, Investment Trends, says: “In 2014, 23% of respondents to the survey declared ‘maximising capital growth’ as their main investment goal over the next year, the highest number in the past six years. In 2011, having a growth priority dipped as low as 14%.

“Those SMSF investors wanting to balance growth and managing risk stood at 32% in 2014, the second highest number over this six-year period (it stood at 34% in 2013).

“At the same time, building a sustainable income stream fell to 33% in 2014, the lowest number over the past six years. In 2011, this was the main priority of 45% of SMSF investors.”

Peker says the research shows SMSF investors continue to be attracted to ETFs and LICs. “Both ETFs and LICs have been on a growth path over the past three years, especially ETFs, although hybrid securities dipped slightly in 2014 compared with 2013.

“In respect to hybrids, what the research shows is the brand name of the issuer is paramount, with nearly 50% of respondents saying this was the key reason for investing. Yield and the balance between risk and return are the next two reasons given.”

The research also shows that there are excellent opportunities for SMSF specialists across all fields related to running an SMSF, says Morningstar’s Grant Kennaway, Director of Manager Research, Asia-Pacific.

“Although the areas where advice is being sought are weighted towards investment, the research highlights that SMSF investors are also looking for specialist advice in areas such as tax planning, the age pension, retirement planning and setting up an SMSF.

“There’s clearly strong market demand for all types of advice, including independent investment research, and a real opportunity for those businesses capable of meeting it,” he says.

Slattery says: “Trustees are now increasingly prioritising growth, a trend that is spreading to the broader investing population. There is no better example of this than the growing intention by SMSF trustees to invest in overseas markets, indicating their investment horizons are extending beyond Australian blue-chip equities and cash.

“But as SMSF investors rightfully seek to diversify, it’s critical they get appropriate professional advice as they move to invest in different asset classes.”

About the SMSF Association:
The SMSF Association is the authoritative voice for the self-managed superannuation fund sector. The Association, which represents professionals providing a range of services across various disciplines in the complex area of SMSFs, is an advocate for the highest professional standards and competence to ensure SMSF trustees always receive the best possible advice.

Contact for interviews:
Andrea Slattery
SMSF Association CEO/Managing Director
M: 0417 898 317

Recep Peker
Investment Trends Senior Analyst
M: 0410 797 007

Grant Kennaway
Morningstar Director of Manager Research, Asia-Pacific
M: 0438 323 688

Nicholas Way
Shed Media
M: 0409 585 979

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