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Betting against acts of God is a great way to make money, but institutional allocations to natural catastrophe reinsurance have stayed relatively static even as some managers are generating double-digit uncorrelated returns.
… and Cuffelinks debunks SMSF international myth
Graham Hand
The Australian Taxation Office estimate of 0.5 per cent for the asset allocation of SMSFs to international investments – often assumed as accurate by industry participants – is way off the mark. Research by investment newsletter Cuffelinks last week indicated the figure is much higher.
The Cuffelinks report (view here) says that international equities are “disguised” in the total ATO data. Big attracters of SMSF investments, either through managed funds or LICs, such as Platinum, Magellan, Colonial First State, AMP Capital and several others, hold global assets which are not included in the 0.5 per cent figure. Similarly, the increasingly popular ETFs and ETPs (such as Magellan’s new global ETP) are Australian domiciled.
A more accurate number, according to Cuffelinks, can be provided by the SMSF administrators, such as Multiport, which can delve into the underlying assets of the funds they administer. Multiport estimates the real figure for SMSF allocation to international shares is 14.4 per cent.
The numbers are still rubbery though. Cuffelinks says that another big administrator, AMP-affiliated SuperIQ, says that of its 11,000 funds under administration, only 5 per cent by number invest in global equities, rising to 9 per cent of its biggest funds. But AMP’s ‘Blue Sky’ report on SMSF opportunities says that 36 per cent of respondents to its survey of managed fund investors say they invest in actively managed international shares.
Graham Hand, Cuffelinks editor, says: “Given the importance of SMSFs in holding one-third of all superannuation and the retirement savings of over one million Australians, and the design of superannuation policy, the knowledge about what they invest in needs significant improvement. This applies to much of the official data produced on SMSFs. The ATO needs to run up a few red flags about using the data. SMSFs are not as badly diversified as most claim.”
