Money Australia - August 2019

(Barré) #1

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
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