Professionals eye new strategies as returns soften
New data shows professionals are following suit with SMSF investors, who are increasingly looking to alternative and riskier stock options in this lower-for-longer environment.
Data collected by Lonsec Connect, a recently launched research platform that draws on both market data and adviser engagement analytics, highlighted a growing interest in growth options among the advice community.
“Financial advisers have refocused their recommendations and research on growth strategies following market volatility in February with property, infrastructure and multi-asset strategies particularly in favour,” Lonsec said in a statement.
“The renewed focus on growth options follows a dash for cash in the first weeks of February after global markets dropped.”
The statement also noted that while adviser recommendations for cash spiked after the February bout of volatility, interest in the asset class “had been building for some time”.
According to Lonsec, this implies advisers were looking for ways to hedge against risk in the event that markets reach “unsustainable levels”.
“Research from the Lonsec Connect platform also shows that financial advisers have paid particular attention to the impact of recent events on their clients’ superannuation accounts with ‘super’ and ‘income’ two of the most highly searched terms by financial advisers over the last 30 days,” the statement said.
“Other terms of interest include ‘global’, ‘fixed’ and ‘property’ suggesting the hunt for safety and yield may be heading offshore.”
As reported yesterday, economists like ABC Bullion's Jordan Eliseo think SMSF investors will have an increased appetite for risk in 2018, given current market conditions and record-low interest rates.
“Most trustees are very comfortable buying the big banks, Telstra, Woolies and the super large caps on the ASX but it makes sense that in an environment where a lot of those companies are going to struggle to grow or even maintain earnings, that investors are going to look at smaller companies that have better growth potential,” Mr Eliseo told SMSF Adviser.
“You definitely see more interest in speculative investments like cryptocurrencies and as long as rates remain low, you'll see more people flirting with these kind of investments.”