According to a new survey by the Financial Services Council (FSC) and UBS Asset Management, as many as two in five self-managed superannuation funds (SMSFs) hold either residential or commercial property, although such investments still make up a small portion of the overall portfolios.
The proportion of self-managed funds that have residential property rose to 22% this year, up slightly from 19% in 2015. Meanwhile, the proportion of schemes investing in direct commercial property—and so excluding listed property trusts—increased slightly to 20% this year from 18% in 2015.
The survey also found that self-managed super fund
trustees are heavily invested in property outside super.
Of those savers who either supplement their self-managed fund income in retirement, or want to do so, 44% said this would come from property investments. In contrast, only 34% said their income was or would be supplemented from share investments.
The survey’s findings indicate that investors are searching for income-generating assets as they combat low interest rates. Many are also placing their bets on soaring property prices in Sydney and Melbourne.
However, the growing interest in houses, apartments, offices, and factories may place self-managed fund returns at risk if there is a correction in the market. Returns are also likely to be crimped by banks tightening the rules around interest-only lending.
One of the biggest changes in the past year was the spike in the proportion of DIY schemes owning international shares, up from 23% of funds last year to 30 percent in 2016. More funds are also invested in exchange-traded funds (ETFs). These are listed products that track an underlying index.
The growing popularity of both asset classes suggests trustees are becoming increasingly aware of the need to diversify their portfolios away from the heavily concentrated Aussie share market.
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