Financial year 2019 marked the "souring of an enduring love affair" between self-managed super funds and Australian blue-chip stocks, says Phil La Greca, executive manager with SMSF administrator SuperConcepts.

La Greca says poor performance, particularly among the top 10 stocks, was behind a "huge swing" away from low growth mature Blue Chips, with trustees preferencing infrastructure and exchange-traded-funds.

“SMSFs are highly engaged investors and they tend to go for investments that bring solid returns particularly during retirement, and unfortunately the top 10 stocks had a roller coaster ride to hell this financial year,” La Greca said.

"SMSF investment decisions in FY 19 revealed the end of an era with blue chip stocks unloaded due to poor performance."

ETFs represented 7 per cent of total assets at 30 June, almost double the figure a year earlier, when it was 4.7 per cent, according to SuperConcepts' research.

Investments in non-traditional managed funds – defined as an investment in a sector-specific or thematic investment funds rather than a general Balanced or Growth fund – also jumped from 0.28 per cent to 0.55 per cent of total assets. La Greca says this is the primary way for SMSFs to access infrastructure.

Royal Commission rocks the ASX 10

The ASX top 10 took investors on a wild ride in fiscal 2019. Half the ASX 10 stocks felt negative impact from the Banking Royal Commission which drastically lowered share values by the end of calendar 2018, La Greca points out.

“Outside of the banking sector, SMSFs questioned the sustainability of Telstra (ASX: TLS) earnings and dividend streams, while the retail sector experienced continued pain from wage stagnation that impacts consumer spending," he says.

However, investors were eventually rewarded by investments in BHP Group (ASX: BHP) and Rio Tinto (ASX: RIO).

Growth chart: 1-year performance of the ASX top 10 by market cap (at 1 July 2018) to 30 June 2019

Grow asx top 10

Source: Morningstar Direct

Investors who rode out the ups and downs to 30 June 2019 could have increased their total return. However, La Greca says "a lot of people did a Sportsbet style of decision making in selling out early in anticipation of an election result that never happened".

“While the election result didn’t turn out to be as adverse for SMSFs as was predicted based on Labor’s failed franking credit policy, many SMSFs assumed like the polls that the election result was a done deal for Labor," he says.

An investor who put $1,000 into the ASX top 10 by market capitalisation at 1 July 2019 would have made a pre-tax (excluding brokerage fees) total return of over 16 per cent – inclusive of a 10.21 per cent capital gain and 6.75 per cent from dividends, data from stock portfolio tracker Sharesite shows.

But an investor who sold out of their initial investment in the ASX top 10 at 1 January 2019 would have made a total return loss of over 4 per cent on that same $1,000.

Morningstar analysts currently have three-star ratings on ANZ Bank (ASX: ANZ) and Commonwealth Bank (ASX: CBA) – implying they believe they are fairly valued at current prices. Westpac Banking Corporation (ASX: WBC) and National Australia Bank Limited (ASX: NAB), however, are both rated four stars – indicating that they believe appreciation beyond a fair risk-adjusted return is likely.

SuperConcepts analysed 2,500 funds to assess the trends identified.