The local SMSF sector is huge! Like nearly $600 billion worth of huge, and these investors are often older, wiser and more conservative. A typical conservative investor would hold a significant portion of assets in cash and fixed interest, however that doesn't appear to be the case for Australia's SMSFs based on a survey conducted by AMP Limited (ASX: AMP).
The survey found that the average SMSF (the sample was taken from 2,200 DIY funds with an average fund size of $1 million) had 30% of assets in cash and fixed interest, 40% in Australian listed shares, 12% in international shares, and 18% in property. This asset allocation provides an opportunity for long-term Australian and international investors.
Exposure to Income and Growth Stocks
If we assume that the asset allocation is typical for the whole sector, then approximately $240 billion of SMSF funds are held in Australian listed shares. For reference, the Commonwealth Bank of Australia (ASX: CBA) has a market capitalisation of $130 billion and BHP Billiton Limited (ASX: BHP) has a market cap of $110 billion.
SMSFs tend to accumulate companies that pay out big dividends and have shown a consistent ability to grow that dividend payout over many years. The AMP analysis dug deeper into the statistics to highlight the top-10 holdings of SMSFs. The analysis found nine companies that are fairly unsurprising choices and one that stood out as a bit of an outlier. The 10 companies are:
- Commonwealth Bank of Australia
- Westpac Banking Corp (ASX: WBC)
- Australia and New Zealand Banking Group (ASX: ANZ)
- BHP Billiton Limited
- Telstra Corporation Ltd (ASX: TLS)
- Fortescue Metals Group Limited (ASX: FMG)
- National Australia Bank Ltd. (ASX: NAB)
- Woolworths Limited (ASX: WOW)
- Wesfarmers Ltd (ASX: WES)
- Woodside Petroleum Limited (ASX: WPL)
Invest like a Pro
I think readers will agree with me that nine of the companies listed above are unsurprising choices for income-driven investors. The one that caught my eye however, was Fortescue Metals. As the sixth-largest holding, and with a market cap of just $9 billion (albeit down from $18 billion not long ago), one must assume that SMSFs own a significant slice of the company.
