SMSFs consolidate their equity positions

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SMSF investors consolidated their Australian equity portfolios during the first half of 2017, trading less often but taking bigger stakes.

Online broker CommSec says in a report that lower market volatility appears to have given SMSF investors more confidence to take bigger positions. The average trade size increased by 7 per cent in the six months to June, compared with the previous six months.

“SMSF trustees’ strategy of buying into the dips and focusing on blue chips appears to have paid off, helping them benefit from a healthy rise in the big banks and miners in the run-up to the ASX 200’s 24-month high of 5956 points on April 30,” CommSec says.

According to the broker’s data, S&P/ASX 200 companies accounted for 60 per cent of SMSF investors’ trades. SMSF trustees have a strong preference for blue chips paying dependable dividends.

Telstra, Transurban, CSL, Santos and Commonwealth Bank topped the list of buys. Telstra and CBA were the most heavily traded stocks, making up 70 per cent of the value traded by SMSF investors.

Clydesdale and Yorkshire Banking Group, South 32, Woolworths, Rio Tinto and Origin were the big sells.

CommSec says SMSF investors have also been seeking cost-effective diversification by using exchange traded funds to gain international equity exposure and broader Australian equity exposure.

While SMSFs represent around 30 per cent of CommSec clients with ETF and listed investment company holdings, they hold more than 50 per cent by value. SMSFs account for close to 60 per cent of international ETFs and LICs and increased their holdings significantly over the six months.

According to actuarial service provider Accurium, Australian shares makeup 38 per cent of SMSF portfolios and overseas shares 12 per cent.

Drawing on data from 65,000 SMSFs it works with, Accurium says SMSFs have 19 per cent of their assets in fixed income, 16 per cent in cash, and 12 per cent in property (clients in the Accurium database hold less in cash and more in fixed income that ATO data shows).

Another difference in the Accurium data is that it looks through the managed funds and ETFs to the asset actually held. As a result, Accurium shows bigger holdings in overseas shares than the ATO figures.

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