What shares should you hold in your SMSF in 2017?

Trillions of dollars have been wiped from the values of shares around the world over the last few trading sessions as markets continue to respond to Brexit.

Australia’s own S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has fared much better than some of its international counterparts, but has still lost 3.4% since Thursday’s close, with most of those losses occurring on Friday.

Much of this pain has been felt in the blue chips, many of which are widely held by more ‘conservative’ investors and those with self-managed superannuation funds, or SMSFs.

For instance, BHP Billiton Limited (ASX: BHP) shares have been crunched 5.2% based on fears of a slowdown in global growth. Australia and New Zealand Banking Group (ASX: ANZ) and Commonwealth Bank of Australia (ASX: CBA) have lost 4.5% and 2.7% respectively, while National Australia Bank Ltd. (ASX: NAB) and Westpac Banking Corp (ASX: WBC) have dropped 3.5% each.

Telstra Corporation Ltd (ASX: TLS), which is often considered to be more defensive than any of those businesses, is the exception, rising 1.2% during that time.

Most portfolios are home to at least one of those shares, while many would hold all six – together with a number of Australia’s other blue-chip shares. What that means is that the average portfolio has likely taken a beating this week, while many retirees and SMSF holders will also have taken a hit.

For the record, many believe that Brexit will only have a short-term impact on the local share market and that any down days could present great buying opportunities for many shares. I tend to agree, however, I wouldn’t suggest that investors should go out and buy any old stock – particularly some of those mentioned above.

Indeed, many individual shareholders and SMSF owners rely too heavily on some of the more traditional blue-chips. While some have historically generated great returns for investors, they are not guaranteed to continue doing so in the future, with some even facing headwinds that could see them lose value in the coming years.

To avoid underperforming the market, SMSF owners may need to look beyond the realms of the big banks and the ASX 20. It may seem risky, but many of these companies have the potential and ability to generate greater growth and better returns.

Of course, many investors would prefer to remain conservative, so companies such as CSL Limited (ASX: CSL) or Burson Group Ltd (ASX: BAP) could be reasonable options. Both companies have the ability to grow over the coming years and possess defensive characteristics that should help protect them during times of heightened uncertainty.

Certain companies offering solid dividend yields could also be a great option to consider, given that the Reserve Bank of Australia is expected to continue cutting interest rates in the coming months. The cash rate is already stuck at a measly 1.75%, which is far exceeded by the dividends offered by many companies within the ASX 200.

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Motley Fool contributor Ryan Newman owns shares of Burson. The Motley Fool Australia owns shares of Burson. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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