SMSFs still liking cash

Balances still up from the GFC

By Darin Tyson-Chan
Mon 01 Mar 2010

SMSFs have increased their cash buffers since the GFC.

Self-Managed Superannuation Fund (SMSF) trustees are still favouring cash as an asset class in the wake of the global financial crisis (GFC), according to
research by ING Direct.

During the middle of the GFC between February and April of last year, ING Direct found balances in its accounts held by SMSF trustees had jumped by as much as 22 per cent.

Continuing on from that shift, many SMSF members are still maintaining a greater cash buffer than before the crisis.

In addition, the analysis found that despite the flight to cash for safety reasons, SMSF trustees were still mindful of the interest rates being offered by the various bank accounts in the market.

The analysis also revealed competition in the banking sector in regard to cash accounts was also a concern among SMSF members, with a view against domination from the big four institutions.

The larger allocation to cash during the GFC also mirrored the usual home market bias with equities, with negative sentiment shown towards US brands and greater faith projected towards the domestic companies.

A further finding of the analysis was a greater demand or transparency in financial services products in general, which has led to individuals having a higher engagement with their investments, including taking more notice of the minor details involved.

"Our customers have told us they are looking for a straightforward and smart way to maximise any surplus cash they may have in their DIY super funds," ING Direct executive director of savings Brett Morgan said.

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