29 April 2012

A recent report by Multiport has shown that self managed superannuation funds have significantly reduced their allocations to cash for the first time since the 2008 financial crisis. At Whites IFM we have been advocating for some time that retirees should look beyond cash in order to generate sufficient income to provide for pension payments without the need to run down capital. The two main asset classes that we recommend for SMSFs are shares and exchange traded income securities such as those issued by the major banks and corporations.

As discussed in this article from today’s Weekend Australian, SMSFs are looking to include higher yielding hybrid or income securities in their portfolios.  We believe this coincides with the RBA’s clear intention to reduce the cash rate to below 4.0% in the coming months. It also indicates that SMSF investors are becoming more comfortable with income securities as a useful contributor to their portfolios with their combination of enhanced yield and relative capital stability.