Mike Taylor writes an article for the website Money Management where he focuses on the long-running myth that SMSF owners are a conservative lot. In light of the share market bloodbath witnessed lately, it has come to be accepted that the SMSF sector can really make a go for it when needed and at such times, they can be much more aggressive than their counterparts.
SMSF owners are not conservative investors, not by a long margin
A Commsec research indicates that the SMSF owners place almost double equities compared to the non-SMSF owners. Among the many SMSF stereotypes, there is one which says that SMSF accounts lie dormant and are inclined towards long-term investments. The truth, on the other hand, is that they are extremely active in the equities space.
SMSF owners have a fairly diversified portfolio (contrary to the myth)
Another myth that needs to be busted is in regards to the SMSf portfolio, for long, we have been fed on false ideas that SMSFs only invest in big stocks; those belonging to Telstra or the major banks. Instead, it has been found that their portfolios are far more diversified than the portfolios of their critics (non-SMSF holders). Where the ‘non-SMSF’ team have 7 stocks on average, SMSFs play with 14 shares. They have come to understand that diversification is the key to damage control and also the way ahead towards strengthening the portfolio.
You can read the original article here.
In light of August 28, 2015
To come back to 28 August 2015, the day that witnessed the highest “single day drop” in the history of share market since the Global Financial Crisis, all that can be said is that no conservative investing fraternity will buy as furiously as the SMSFs did. Their aggressiveness is manifest in the Commsec trading patterns that show “net buying” from the ‘selfie’ sector.
Critics distort facts
It is reasonable to expect that a financial sector that has gained so much popularity over a very short time will have its share of critics. The opposition camps will bid to harm it but the mudslinging campaigns on SMSF almost always distort the facts and shape flawed public perceptions. There is a need to dispel the myths and read things only in the light of statistics and data.