Understanding the average SMSF investor

The average self-managed super fund (SMSF) investor holds $1.77 million in assets of which a good majority is invested in Australian shares, according to the latest ASX Australian Investor Study.

Delving into the trading behavior of SMSF investors, the study found opportunities to gain strong returns remained their top consideration for holding an SMSF (49 per cent), followed by potential risks of investments (39 per cent) and aligning their investments with their personal circumstances (31 per cent).

The research, conducted on behalf of the Australian Securities Exchange (ASX) by Investment Trends, surveyed over 5,500 Australian adults, including current investors and non-investors.

The median fund size was $1.04 million compared to $132,000 for non-SMSF investors although the average was $1.77 million. Some 11 per cent had an SMSF over $5 million in size.

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In terms of holdings, it noted SMSF investors overwhelmingly favoured Australian shares with 73 per cent investing in the asset class, compared to 57 per cent of non-SMSF investors. Their other top investments were residential investment property (41 per cent), term deposits (32 per cent), and ETFs (27 per cent). 

Points of differentiation with non-SMSF investors included a higher level of investment in listed investment companies, real estate investment trusts, and commercial property. 

“These product types may be attractive for SMSF owners because of their potential tax advantages or because they may provide a regular and stable income stream compared with other investment products,” the report suggested.

Compared to just three years ago, SMSF investors who traded any investment product in the past year focused on Australian shares (74 per cent) as well as ETFs (28 per cent), international shares (18 per cent), and REITs (14 per cent) at significantly higher levels.

A quarter of SMSF investors said they check their portfolios daily, with over half (52 per cent) saying they monitor it weekly.

“This could imply that they enjoy the investing process — or at least wish to maintain control over their investments,” the report added.

Interestingly, SMSF investors were found to be more likely to base their decisions on professional advice (19 per cent) than their non-SMSF investing counterparts (12 per cent). However, online broker websites, the ASX, and company annual reports or websites were their primary sources of investing information. 

Non-SMSF investors on the other hand, turn to friends and family and social media for advice. 

Additionally, the ASX Australian Investor Study found that, among those who do not currently have an SMSF, 17 per cent said they wanted to set one up within the next two years. Much of this cohort are next-generation investors (41 per cent).

The report explained: “While traditionally SMSFs have been the domain of experienced investors with higher fund balances, SMSFs could become more appealing to younger investors in the future, because they tend to provide greater control over the investors’ investments and retirement savings.”