CommSec’s SMSF Trading Trends Report reveals self managed super funds (SMSFs) have taken advantage of local and international share market uncertainty to invest in quality stocks at bargain prices. The report covers SMSF trading for the second half of 2018.
International political and economic factors, such as US-China trade tensions, uncertainty over the Brexit deal, rising US interest rates and slowing global economic growth, pushed investor sentiment into negative territory towards the end of the year.
This resulted in a widespread market sell-off in the last quarter of 2018 that saw a number of well-respected companies suddenly become cheaper and more attractive as the Australian sharemarket had its worst year since 2011.
Marcus Evans, Head of SMSF Customers for Commonwealth Bank said: “SMSFs used this bearish market as an opportunity to pick up quality blue chip companies that are often seen as expensive.
“SMSFs bought up healthcare stocks including CSL and Cochlear with trades by value up by 80 per cent and 85 per cent respectively. In the past, SMSFs have been criticised for not having enough exposure to these stocks – now it appears they were simply biding their time,” Mr Evans said.
Macquarie Group also featured strongly on the buy side with SMSF trades in the stock increasing by 31 per cent in value.
Meanwhile, technology stocks continued to spark the interest of SMSF investors with some significant increases in trading value and a shift from buying to selling, particularly in the weaker second quarter.
Afterpay led the way in the tech space and was the ninth most traded stock for the period overall, with trades increasing 236 per cent by value. The technology sector as a whole rose from 5.6 per cent to 6.8 per cent of all SMSF trades by value.
The report noted a trend away from direct international share investment to an increased investment in Exchange Traded Funds (ETFs) indicating that SMSFs are trading markets rather than individual shares to mitigate risk.
Key report findings
- Multiple worries about global political, market and economic issues saw the ASX200 slide by more than 14 per cent from its high of 6374 in August to a low of 5468. Overall, the Australian market was down 6.9 per cent in 2018, its worst result since 2011.
- SMSFs are showing renewed interest in the ASX20 and ASX50 following the market decline in the last quarter of 2018 and have snapped up blue-chip bargains, with a focus on finding quality at a reasonable price, not just ‘cheap’ stocks.
- The surge in direct international shares has slowed as SMSFs have switched their focus to Exchange Traded Funds (ETFs) and Listed Investment Companies (LICs), indicating they are trading markets to potentially benefit from market recovery without the risk of picking stocks.
- While property has remained a mainstay of many SMSF portfolios, declining markets and a potential ban on non-recourse lending could see funds flow out of property and into other investments.
About the CommSec SMSF Trading Trends Report
The CommSec SMSF Trading Trends Report is an in-depth exploration of the online trading behaviour of SMSF investors, released every six months. SMSFs are a significant investor segment, representing 30% of all superannuation investments in Australia. This report is based on a detailed analysis of the trading behaviour of active CommSec clients between 1 July 2018 and 31 December 2018. The sample comprised a diverse cross-section of active share traders - defined as those who had traded at least once during the 12 months before the study period - including both SMSF and non-SMSF investors.