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.
The problem is that Fortescue is unlikely to deliver a significant dividend yield this financial year with the iron ore price languishing at five-year lows. Luckily, every year Motley Fool investment advisor Scott Phillips hand-picks 1 ASX dividend stock with outstanding potential. Just click here to download your free copy of today.
Motley Fool contributor Andrew Mudie owns shares in Foretescue. You can find Andrew on Twitter @andrewmudie