SMSF trustees spurred into action post-covid: Charts of the week
We take a visual look at the latest trends in SMSFs.
Last week Morningsgtar covered Vanguard's 2021 SMSF trends report, writing that SMSF trustees were moving out of cash into equities amid low interest rates and soaring stock markets - even "secular stagnating" Japan's Nikkei 225 returned 31 per cent in FY 2021.
Today in charts of the week, we've visualised some of the data around asset allocation, portfolios and ESG.
First off, an increasing number of trustees are changing their fund's asset allocation. The amount of those who've changed more than 50 per cent of their fund is double the level from 2017.
The average portfolio has the smallest proportion of cash and cash-like products since 2010.This is partly a response to a low interest rate environment said Balaji Gopal, Head of Personal Investor at Vanguard Australia
“Many SMSFs have traditionally relied on the yield generated from their investments to provide income during retirement," he said.
"Unfortunately, with interest rates expected to remain low for the next year at least, cash investments are unlikely to produce the desired level of income.”
The majority of investors are confident that ESG investments will yield a similar or superior return to their non-ESG equivalents. Only 31 per cent of SMSF trustees who responded thought that returns would be worse, with 7 per cent content to accept the lower returns.
The report is released annually and is up to its 16th edition. The responses come from a representative survey of trustees, this year 2,523 were polled.
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