The SMSFs versus the big guns

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As they review their very successful 2012-13 year investment performance, SMSF trustees might spend some time contemplating how they achieved their returns – and how they might repeat them in the current year. The reason: SMSFs still have what seems like an over-weight to cash and term deposits, which could become a handicap if short-term rates continue to sink.

A numbers game

Based on the last ATO numbers, SMSFs have 29.5% to 30.4% in cash, term deposits, debt securities and loans (the range represents the two numbers the ATO gives for funds in the accumulation and pension stages respectively). This contrasts with levels of cash and fixed interest of 20% or less held by industry and retail funds in their normal default fund.

In addition, the average SMSF appears to be heavily underweight overseas shares and substantially underweight in total share holdings, compared with the typical institutional competitor. The ATO figures give total share holdings of 30.8% for accumulation funds and 35.5% for pension funds with only 0.3% in overseas equities.

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