Advised SMSFs more invested in ETFs

Oksana Patron

24 March 2023

Advised self-managed super funds (SMSFs) more often use exchange traded funds (ETFs) for diversification and allocate 22% of their portfolios to this asset class compared to self-directed SMSFs (6%), according to data from AUSIEX.

Also, the advised firm’s clients had just under 60% of their holdings in ordinary shares in February, compared to a more aggressive asset allocation of 87% among self-directed SMSF investors.

Brett Grant, head of product, marketing and customer experience at AUSIEX, said that hybrid securities ticked up to just over 4% of total traded value among that cohort of advised clients last year and expectations of a better year for bonds was likely behind the notable preference that many displayed for fixed interest ETFs this year.

According to Grant, most AUSIEX clients analysed were heavily invested in the financial and materials sectors which dominated the Australian share market, but, SMSF clients with an adviser also had a greater inclination to spread their capital across other sectors by taking overweight positions in healthcare stocks (12% of holdings) and consumer staples (8% of holdings).

With remaining volatile market conditions for the foreseeable future combined with economic pressures and geopolitical uncertainty, the outlook for investors was expected to remain cloudy.

“In this environment, trustees may be more likely to seek professional advice to help manage risk by diversifying their retirement savings into assets previously not on their radars.

“With balances that are on average four times larger than non-SMSF clients, trustees who seek advice continue to provide a significant business opportunity for planners who can provide quality service to this segment of the market.”