On average, SMSF contributions dropped by a quarter to $35,200 per fund in 2013, compared with $47,500 this time last year, according to Multiport’s investment patterns survey for June 2013.
Philip La Greca, AMP SMSF Administration head of technical services, linked the reduction in the concessional contributions caps with the drop. However, he said trustees continue to actively manage their investments.
There was a reduction in overall cash holdings, which dropped from 23.4 per cent to 21.9 per cent during the June quarter, according to the survey.
“If you look at the June 2012 numbers … there’s been virtually a 20 per cent drop in terms of the amount of cash [over 12 months],” Mr La Greca told InvestorDaily. “That’s a significant move away from cash.”
There are several market factors which could have influenced this reversal, Mr La Greca added, with consecutive interest rate cuts being “a significant driver”.
Mr La Greca also indicated that inflation is currently running at a higher rate than cash, which further detracts from its viability as an investment option.
Besides consumption, the decrease in the cash sector is also the result of funds being moved into the share market and the fixed interest sector, with fixed interest up 2.6 per cent.
Influenced by the “significant weighting” that direct Australian shareholders have in the top 20 stocks, the allocation to Australian shares increased by 0.8 per cent to 37.5 per cent, according to the survey.
“[This is] slightly higher than expected from normal growth in the market,” Mr La Greca said.
