NEWS – Residential Property is not a Major Asset in SMSFs

NEWS – Residential Property is not a major asset in SMSFs

Residential Property is not a Major Asset in SMSFs

Glenn Freeman writes at Professional Planner

Residential property plays only a minor role in self-managed super fund (SMSF) investment portfolios, according to Graeme Colley, director of technical and professional standards, SMSF Association.

Property is the third-largest asset class of SMSF investment, with the combination of direct investments and real estate investment trusts totalling around 15 per cent of the total pool of SMSF assets.

When it comes to assumptions that residential property equates for a majority of these investments, Colley says, “That’s quite incorrect. In fact, 80 per cent of the investments of SMSFs are in commercial properties.”

“These are not necessarily properties connected to the underlying member of the SMSF or connected entities. They’re also looking at the open market of commercial property and are investing via arm’s length arrangements,” he says.

“SMSFs often get criticised for the proportion of assets invested in those two particular sectors [equities, including property, and cash and fixed term assets] but there’s good reason why people go into it. You want to be really looking at a diversified portfolio.”

“People have this misconception that most of it is invested in domestic property, which is not true. It’s not only in the direct investments of SMSFs, but also indirectly through shareholdings that people might have in equities,” Colley says. READ MORE HERE

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