Advised SMSFs better placed for volatile market

AUSIEX data has found that there was a clear difference in the asset allocation of advised and self-directed SMSFs.

According to Brett Grant, head of product, marketing and customer experience at AUSIEX, the analysis of a substantial portion of the firm’s client data indicated that advised clients held just under 60 per cent of their holdings in ordinary shares, while self-directed SMSF investors took a more aggressive approach with an 87 per cent allocation.

Conversely, advised SMSFs, he noted, appeared to be more focused on using ETFs for greater diversification or to gain trading efficiencies.

“Advised clients also showed greater interest in ETFs by allocating 22 per cent of their portfolios to this class, versus only 6 per cent for self-directed SMSFs,” Mr Grant said.

Mr Grant also noted hybrid securities ticked up to just over 4 per cent of total traded value among the cohort of advised clients in 2022, and the expectation of a more favourable year for bonds likely contributed to the significant preference many exhibited for fixed interest ETFs.

“Most AUSIEX clients analysed are heavily invested in the financial and materials sectors which dominate 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 per cent of holdings) and consumer staples (8 per cent of holdings),” he said.

Looking ahead, Mr Grant assessed that market conditions would likely remain volatile for the foreseeable future as economic pressures and geopolitical uncertainty have made the outlook for investors difficult to parse.

“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,” he said.

“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.”