Should you ditch your SMSF shares for property and cash?

AMP Limited (ASX: AMP) recently released the results of its SuperConcepts SMSF Investment Patterns Survey for the 12 months ending June 30.

The report makes for interesting reading, particularly for those with self-managed super funds (SMSF) who can use the survey results to benchmark their own portfolio asset allocation decisions against.

Arguably the key takeaway from the survey was the discovery that SMSF trustees have reduced exposure to equities, while boosting exposure to property and cash.

Key finding

  • Portfolio allocations to Australian shares fell from 37.1% to 34.5%
  • International share allocations declined 1% to 13.1%
  • Cash holdings increased 1% to 18%
  • Direct and indirect property assets increased from 18.3% to 21.7%
  • The four major banks and Telstra Corporation Ltd (ASX: TLS) remained the five most commonly held investments
  • Rounding out the top 10 most commonly held investments (by dollar value) in the SMSFs surveyed were BHP Billiton Limited (ASX: BHP), Wesfarmers Ltd (ASX: WES) and CSL Limited (ASX: CSL). Along with funds managed by Magellan Financial Group Ltd (ASX: MFG) and Platinum Asset Management Limited (ASX: PTM)

It’s hard to imagine that investors are increasing their exposure to cash at a time when interest rates are heading to record lows. However, it appears that the concerns regarding bank valuations, oil prices and Brexit have all contributed to investors adopting a “risk-off” strategy.

Don’t follow the crowd

While a cross-section of SMSF investors might be increasingly disillusioned with the ASX and choosing to direct their investments in the direction of perceived “safe” assets such as property and cash, this could, in fact, be a sign that you should employ the opposite strategy.

After the significant run up in property prices and the weight of money which has flowed into the sector, I would be particularly nervous about chasing returns in the property sector.

Likewise, while cash does provide optionality for the active investor, given the low interest rates on offer it hardly seems like a sensible long term strategy for most defensive SMSF investors to employ.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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