SMSF contributions declining

Self-managed superannuation funds (SMSFs) have seen their annual  average contributions fall by $12,300 over the past financial year (FY) ending June 30, according to a recently released report by wealth manager AMP (ASX: AMP).

The average contribution to a SMSF in FY2013 was $35,200, down from $47,500 in FY2012. AMP SMSF Administration Head of Technical Services Philip LaGreca suggested that the fall in annual average contribution was most likely a direct result of the cut in the concessional contributions cap to $25,000, which now applies to members of all ages.

SMSF investors were found to have actively increased their exposure to Australian equities by 0.8% to 37.5% and their exposure to international shares by 0.4% to 9.3%. The survey findings also noted that there was a significant weighting amongst SMSF to the ASX top 20 stocks, with the three most common companies held by SMSFs being Commonwealth Bank (ASX: CBA), Westpac Bank (ASX: WBC) and BHP Billiton (ASX: BHP).

AMP also forecast that the increase in the Super Guarantee to 9.25% coupled with the increase in the concessional cap to $35,000 for people over the age of 60 should lead to a lift in contribution levels in FY2014. Higher contributions plus an increase in allocations to both domestic and international shares by SMSF investors has the potential to benefit fund managers including listed firms such as Perpetual (ASX: PPT), which commands a strong position in domestic equity funds, and Platinum Asset Management (ASX: PTM), which holds a market leading position in its offering of international equity funds.

Foolish takeaway

The tailwind of an increased super guarantee and incentives to maximise super contributions means that investments that provide exposure to the growing superannuation industry can be very appealing. Funds management, accounting and financial planning firms stand to benefit from this positive trend. The highest quality businesses in each field likely deserve a place on investors’ watchlists and at the right price perhaps even in their portfolios.

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Motley Fool contributor Tim McArthur owns shares in Perpetual.

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