Contents
This article includes the 20 most popular managed funds invested in by SMSFs as at 30 September 2018. This article uses data supplied by Class, an SMSF administration software company, and is based on a statistical analysis of the 160,000+ SMSFs administered using Class software. We thank Class for providing SuperGuide with access to such valuable data.
If you are also interested in ETFs, see SuperGuide article SMSF investment: 20 most popular ETFs.
Managed funds are an investment scheme where investors opt to have a licensed professional – typically, a fund manager – manage investments on their behalf. The fund manager will oversee a portfolio of clients’ funds, which are grouped together.
Instead of the fund manager managing each client’s individual capital, pooled funds provide them with greater leverage to trade in various types of asset classes. In turn, each individual owns a particular number of ‘units’ in the fund in proportion to their capital outlay and the initial value of the pooled fund.
On top of capital growth, investors also typically receive income streams in the form of distributions. While these may be declared on a periodic basis, distributions are ultimately subject to the performance of the fund and its earnings. Importantly, the fund manager will deduct management and performance-based fees from earnings before distributing proceeds.
Today there are hundreds of managed funds in Australia, and according to ABS figures total funds under management at June 30 2018, (excluding superannuation and insurance), equalled approximately $428 billion.
The benefits of diversification and prospects of superior returns are the main factors that draw investors to managed funds. Some fund managers also design funds for specific assets or strategies, such as growth or income.
Managed funds may also cater for active or passive investment strategies. As the name implies, actively managed funds are those where the fund manager trades assets in order to try beat market returns. On the other hand, passive investment funds are designed to mirror particular indices, so assets are selected to replicate similar returns. Since actively managed funds require greater levels of management and expertise, fees are higher and have the potential to drag down returns over the long-run.
It’s important to remember that managed funds provide the fund manager with full control over investment decisions and timing when funds may be withdrawn. At times fund managers can restrict when you can cash out funds, which can limit your liquidity. Hedging and currency movements are also something that have the potential to influence overall performance over time.
Managed funds as an asset class for SMSFs
According to Class’ data, as at September 30 2018, nearly one third (31.3%) of SMSFs were holding managed funds. By comparison, 65% of SMSFs invest in Australian shares, 30% invest in direct property and 20% invest in ETFs.
Interestingly only 6% of SMSFs directly hold international shares, so perhaps many more are instead using managed funds to get exposure to international markets.
The percentage of SMSFs holding managed funds has actually decreased from 32.4% to 31.3% over the last 18 months, but over the same period the value that these managed funds makes up of all SMSF assets has increased from 11.5% to 12.1%. This may be because those SMSFs with managed funds have increased their investment in managed funds, and also part of the increase may have been if managed funds had achieved better returns over that time.
Table 1: SMSF investment in managed funds over time
| Quarter | Percentage of SMSFs holding managed funds | Percentage of all SMSF assets | Percentage that the top 20 make up |
|---|---|---|---|
| Mar 2017 | 32.4% | 11.5% | 24.1% |
| Jun 2017 | 32.1% | 11.7% | 24.2% |
| Sep 2017 | 32.0% | 11.7% | 23.5% |
| Dec 2017 | 31.2% | 11.9% | 23.6% |
| Mar 2018 | 31.2% | 12.2% | 23.1% |
| Jun 2018 | 31.2% | 12.3% | 22.9% |
| Sep 2018 | 31.3% | 12.1% | 22.5% |
Source: Class (class.com.au). Data as at 30 September 2018
Managed funds may also have experienced some competition from ETFs, which have greatly increased in popularity over recent years. In June 2011, just 6.9% of SMSFs held ETFs, but by September 2018 this had increased to 20.5%. However, more than four times the value of assets are invested in managed funds (12.1%) compared to ETFs (2.7%).
Source: Class (class.com.au). Data as at 30 September 2018
20 most popular managed funds invested in by SMSFs
The top 20 list of managed funds below is ranked by the percentage of SMSFs that hold these managed funds, rather than the value of assets that SMSFs have invested in those managed funds, although both figures are provided in the table.
Table 2: 20 most popular managed funds invested in by SMSFs
| Rank | Security Code | Description | % of Funds with Managed Funds that hold this security | % of total SMSF Managed Fund investments* |
|---|---|---|---|---|
| 1 | MGE0001AU | Magellan Global Fund | 23.8% | 4.1% |
| 2 | PLA0002AU | Platinum International Fund | 21.2% | 3.4% |
| 3 | PLA0004AU | Platinum Asia Fund | 9.8% | 1.3% |
| 4 | MAQ0482AU | Winton Global Alpha Fund | 7.8% | 0.8% |
| 5 | FID0008AU | Fidelity Australian Equities Fund | 6.9% | 1.3% |
| 6 | MAQ0277AU | Macquarie Income Opportunities Fund | 6.6% | 1.0% |
| 7 | MIA0001AU | MFS Global Equity Trust | 6.5% | 1.0% |
| 8 | HOW0052AU | Kapstream Absolute Return Income Fund | 6.1% | 1.0% |
| 9 | IOF0045AU | Antipodes Global Fund – Class P | 5.9% | 0.9% |
| 10 | ETL0018AU | PIMCO Global Bond Fund – Wholesale Class | 5.9% | 0.7% |
| 11 | ETL0032AU | Aberdeen Emerging Opportunities Fund | 5.8% | 0.5% |
| 12 | IOF0145AU | Janus Henderson Tactical Income Fund | 5.8% | 0.8% |
| 13 | MAQ0410AU | Walter Scott Global Equity Fund | 5.7% | 1.2% |
| 14 | VAN0003AU | Vanguard W’sale International Shares Index Fund | 5.7% | 1.1% |
| 15 | VAN0004AU | Vanguard Australian Property Securities Index Fund | 5.3% | 0.5% |
| 16 | CSA0038AU | Bentham Global Income Fund | 5.2% | 0.6% |
| 17 | BFL0004AU | Bennelong ex-20 Australian Equities Fund | 4.9% | 0.7% |
| 18 | TGP0034AU | RARE Infrastructure Value Fund – Unhedged | 4.8% | 0.4% |
| 19 | GSF0002AU | Grant Samuel Epoch Global Equity Shareholder Yield (Unhedged) Fund | 4.8% | 0.6% |
| 20 | ETL0016AU | PIMCO Diversified Fixed Interest Fund – Wholesale Class | 4.7% | 0.7% |
Source: Class (class.com.au). Data as at 30 September 2018
While the percentage of assets managed by the most popular managed funds has always been relatively concentrated, there has been some degree of fragmentation over the last 2 and a half years.
In early 2016 the top three managed funds, in terms of the number of SMSFs that were holding those funds, accounted for 11.2% of total SMSF investment in managed funds. While the top three funds have remained the same – albeit in different order – by September 2018 the top three managed funds now only account for 8.8%.
In terms of asset allocation, international equities have remained the leading asset investment within managed funds, consistently forming more than half of all capital allocation.
Another observable trend with SMSFs is the importance cash and fixed interest – both local and international – play in the eyes of investors and in forming a well-rounded portfolio. Combined, the three asset classes have continually maintained above 24% of asset allocations in each of the last 30 months, often comprising more than 28%.
Table 2: Asset allocation of 20 most popular managed funds invested in by SMSFs
| Quarter | International equities | Cash | Australian Fixed Interest | International Fixed Interest | Australian Equities | Listed Property | Other |
|---|---|---|---|---|---|---|---|
| Mar 2016 | 58.0% | 12.0% | 10.0% | 8.0% | 6.0% | 2.0% | 4.0% |
| Jun 2016 | 57.0% | 12.0% | 8.0% | 7.0% | 7.0% | 6.0% | 3.0% |
| Sep 2016 | 52.0% | 10.0% | 11.0% | 11.0% | 7.0% | 5.0% | 4.0% |
| Dec 2016 | 55.7% | 10.7% | 9.9% | 7.9% | 6.8% | 5.1% | 3.9% |
| Mar 2017 | 57.8% | 9.1% | 10.0% | 7.6% | 6.6% | 4.9% | 4.0% |
| Jun 2017 | 56.7% | 9.3% | 9.6% | 7.7% | 8.2% | 4.7% | 3.8% |
| Sep 2017 | 55.9% | 8.7% | 11.3% | 9.6% | 8.1% | 2.6% | 3.8% |
| Dec 2017 | 59.0% | 8.1% | 11.5% | 9.4% | 5.8% | 2.5% | 3.7% |
| Mar 2018 | 61.1% | 8.5% | 7.6% | 8.2% | 8.6% | 2.3% | 3.7% |
| Jun 2018 | 58.7% | 10.4% | 7.8% | 7.8% | 9.3% | 2.3% | 3.7% |
| Sep 2018 | 54.4% | 11.0% | 9.8% | 9.8% | 8.9% | 2.5% | 3.6% |
Source: Class (class.com.au). Data as at 30 September 2018
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