Australia's $326 billion self-managed super funds may be the fastest growing super fund sector to date, but research shows they are missing out on the Asian equities boom with their negligible exposure to international equities.
Ralf Zurbrugg, a professor at the University of Adelaide, revealed at the SMSF Professionals' Association of Australia conference earlier this year that while the average investor's default strategy allocated 23 per cent to international equities, SMSF's 51 per cent allocation to equities stem purely from local investments.
With little or no allocation to international equities, this could mean SMSF investors have been missing out on Asian equities' sterling performance, if the meteoric 41.3 per cent rise in the MSCI Emerging Markets Index in the last eight months is anything to go by.
Graeme Colley, superannuation strategy manager of ING Australia, said that while SMSF's general non-exposure to international equities have been noted by regulators and fund managers, it is not surprising because of the higher risks associated with the market.
"It depends on how you diversify, in some cases not investing in Asian equities might not be an issue because you'd find that [Asian] equities markets can be difficult by their own nature - due to currency risk and volatility," he said.
Investors, particularly those with lower value SMSFs, tend to directly invest and as such prefer the ease and accessibility of the local equities market.
However, SMSF investors are still marginally exposed to Asian markets through their international equities managed funds, he said.
A contrary view comes from Peter Cocks, national relationship manager at Cavendish Superannuation, who said the firm had a large number of clients with international equities exposure.
"It's predominantly through managed funds, not direct holdings," he said. Meanwhile, others have turned to exchange traded funds (ETFs) for exposure to countries in the continent, although this avenue is relatively young and many are still testing the waters, said Colley.