Money Australia - August 2019

IN BRIEF

INVESTING

SMSFs

spread their

investment

wings

S

elf-managedsuperfund(SMSF)

trusteesaretakinga defensive

stancein theirassetallocation,

accordingtothelatestVanguard

andInvestmentTrendsresearch.

Surveyingabout 5000 SMSFtrus-

teesand 300 financialplanners

whoadviseSMSFs,theexpectation

formarketreturnsis 1.4%overthe

next 12 months.

Thisis farbelowtheexpectations

ofmanyeconomists,including

thoseatVanguard,saysRobinBow-

erman,headofmarketstrategyat

VanguardAustralia.SMSFtrustees

remainmostinclinedtoinvestfur-

therin blue-chipshares,with54%

citingthisasa likelychoiceover

thenext 12 months.

Allocationtocashincreased

slightlyoverthepastyearto25%,

largelyattheexpenseofunlisted

managedfunds,whichdropped2%.

VanguardsayswhilemanySMSFs

haveadopteda defensivemindset,

theirappetitefordiversifyinginvest-

mentproductshasincreased.The

numberofSMSFscurrentlyinvest-

ing,orplanningtoinvest,in

exchangetradedfunds(ETFs)in the

yearaheadsurgedfrom140,

to194,000in thepast 12 months.

Thefindingsalsoshowed

self-managedfundsareseeking

greaterexposuretooverseasassets,

especiallythroughETFs.However,

52%ofrespondentscitelackof

knowledgeaboutoverseasmarkets

andcurrencyriskasthetopbarriers

toobtainingmoreexposure.

Vanguardsayswhilebuildinga

sustainableincomestreamremains

a keyinvestmentgoalformany

SMSFs,a growingproportion(15%)

sayprotectingtheirassetsagainst

marketfallswillbetheirkeyfocus

fortheyearahead.

MORE

INVESTING

STORIES ON

P68-

COMPILED

BY

DARREN

SNYDER

ASSET ALLOCATION

Cautious investors look to

peer-to-peer lending

T

he Reserve Bank’s recent deci-

sion to cut the official cash rate

is influencing the investment strate-

gyofa sizeable portion of investors

linkedwith peer-to-peer (P2P)

lending platform RateSetter.

In its latest survey

of 328 customers,

RateSetter says 67%

of respondents were

withdrawing bank sav-

ings to fund their P2P

investments. About

a fifth (19%) said their

investment strategy

was directly influenced

bytheRBA cut.

Chief executive Daniel Foggo says

P2P lending can offer a healthy mid-

dle ground for cautious investors

who want more out of their money

(see table).

“Everyday Australian investors

no longer have to expose their

hard-earned wealth to volatile or

hard-to-access investments such

as equities or high-yield bonds in

order to access stable, attractive

returns,” says Foggo.

“Cash accounts are for saving,

not for investing. Consumers should

be questioning whether banks are

a viable option to generate wealth.

Keepingmoneyin bankaccounts

and term deposits when interest

rates are low can be a guaranteed

way to lose money in real terms.”

The RateSetter research shows

more than 79% of investors cite low

bank interest rates as contributing

to their motivating in switching to

thelendingplatform.RateSetter

investorshaveearnedmorethan

$30million in interest to date. In

April,thevalueofaggregateloans

fundedthroughRateSettersur-

passed$500million, reflecting a

70%annualgrowthin loansfunded.

INA NUTSHELL

• Justover20,000SMSFswere
  setupin thefirstquarterof2019.


• SMSFsrepresentedabout
  $747billionin retirementsavings
  asatMarch2019.


• TheaverageSMSF balance^
  is $1.2million.

WEIGHTED AVERAGE RATE ACROSS INVESTMENT MARKETS (JUNE 30, 2019)

1 month 1 year 3 yrs 5 yrs Renewable Total on loan* Total weighted average return

3.62% 4.31% 7.12% 8.84% 6.35% $223,876,811.17 7.52%

Annualised returns since inception. *Investment markets across RateSetter. Source: RateSetter