SMSF’s reduce cash
SMSF trustees have turned their focus to international markets after continued low interest rates deliver uninspiring cash returns. The latest survey of SMSFs from Multiport shows that for the June quarter, cash holdings in SMSFs reached a record low of 18.29 per cent, the lowest level since the quarterly survey began in 2007. The significant decrease in cash holdings has mainly flowed into international shares, particularly into those ASX-listed Exchange Traded Funds (ETFs) that invest in overseas assets.
A RaboDirect survey of people’s expectations in retirement and how much they are likely to have in retirement savings finds there is a $4.21 trillion gap in the nation’s desired retirement pot. That is an amount that exceeds the annual GDP of countries such as the United Kingdom, Germany and India. The average working Australian faces a shortfall of $281,000 – the difference between the amount retirees expect to have for their retirement and the actual amount they believe they will need.
Morningstar credit analyst John Likos says investors have to understand the risks of “hybrids”, the listed investments that combine characteristics of equities and debt. Demand for the securities is strong but they are complex investments, Likos told a Morningstar investor conference. He said investors need to understand the securities, the risks involved and how they are priced. During times of market stress they exhibit equities-like behaviour, he said.
Lenders off fixed term mortgages
Low interest rates in the United Kingdom have seen lenders off fixed rate mortgages on lengthy terms. According to press reports, the West Bromwich Building Society and Nationwide have both launched 10-year fixed rate mortgages. West Bromwich’s 10-year loan ins fixed at at 3.99 per cent, while Nationwide have pegged theirs at 3.49 per cent. Existing customers can go even lower at 3.39 per cent on the building society’s 0.1 per cent loyalty discount.