SMSFundamentals | Feb 15 2012
By Chris Shaw
The Self-managed superfund Professionals Association of Australia and Russell Investments today released findings from their second annual SMSF report, giving insight into how trustees and advisers are dealing with both the opportunities and challenges in the sector and difficult market conditions.
The main finding from the report was trustees are currently hoarding cash and sitting on the sidelines of investment markets. But the reason for this is not to wait for investment opportunities, rather it is as a deliberate risk reduction strategy.
Risk reduction is now the key driver of asset allocation according to Patrick Curtin, managing director of retail investment services at Russell Investments. Risk reduction comes in ahead of both costs and returns as the driving factor of investment decisions for SMSFs.
As Curtin notes, this is a reflection of the fact the proportion of SMSF trustees that see equities as too volatile now stands at one-third, up from just 17% in the previous survey. The trend to risk reduction is also clear in the intentions of trustees, as Curtin notes the proportion of trustees saying they haven't yet had time to invest but plan to do so in the coming year has fallen to 6.3%, down from 14.4% in 2010.
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