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SMSFs hold record levels of cash and property

SMSFs are holding record levels of cash despite an interest level drop in February, according to ATO data.

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The Australian Taxation Office (ATO) statistics show that SMSF assets under management stood at $1.02 trillion in the December quarter and that, as at 31 December 2024, SMSFs held $161.4 billion in cash investments, up from $160.7 billion in the September quarter, or around 16 per cent of their total assets.

Simon Arraj, founder and responsible manager of Vado Private, said this comes despite a drop in savings account returns.

“New data from the Reserve Bank of Australia shows that three-year term bank deposits interest rates fell to just 3.25 per cent in February 2025, well below 4.0 per cent a year earlier,” he said.

“Additionally, online savings accounts returned just 1.7 per cent to savers, down from 1.85 per cent. Compared to inflation at around 2.5 per cent in December 2024, real returns on bank online savings accounts are now well below zero, and the bottom line for cash investors is that savings rates could fall further this year if official rates fall again.”

Arraj said that in such an environment, SMSFs should rethink their cash investments and equity holdings as share market volatility is returning.

He continued that despite equity market volatility, SMSFs invested a significant portfolio of their assets in Australian shares – $277.6 billion in the December quarter, representing 27.2 per cent of all SMSF assets.

“That was down from $281.7 billion in the September 2025 quarter. SMSFs invested a record $168 billion in direct property, accounting for 16.5 per cent of their total assets. However, fixed-income investments accounted for just $11.7 billion of SMSF assets, with another $7.1 billion invested in loans, accounting for just 1.8 per cent of total SMSF assets,” he said.

“With share market correcting, SMSFs would benefit from a more balanced approach to asset allocation, including greater fixed-income allocations, including to private credit. These investments have historically offered attractive yields, which is very important to all investors, particularly as equity markets fall.”

Arraj said the Australian share market had dropped around 4 per cent over the 2025 year to 17 March, contributing to investor insecurity, while in the US, equity markets have dropped by more.

“Heightened uncertainty about US trade tariffs and the threat of a global trade war has pushed many investors to sell equities. Private credit can provide much calmer waters for investors than share markets,” Arraj said.

He added that according to the IMF, private credit has grown rapidly since the global financial crisis, taking market share from bank lending and bond markets following the long period of low interest rates, which drove a huge expansion of alternative investment strategies.

“Private credit returns are robust at a time when falling term deposit and savings account rates are eroding the real return investors get on investments. For SMSF investors seeking higher yield, now is the time to consider reallocating some of their assets to private credit investments,” he said.

 

 

 

 

 

Keeli Cambourne
March 21 2025
smsfadviser.com


David Forrest Download David's Adviser Profile

David Forrest

Director
BEc (Acc), MBA, CPA, FFin

David has been in the Financial Services Industry for nearly 30 years. He was one of the founding Directors of the successful Financial Planning and Stockbroking Practice, Henderson Gregory Forrest, for a decade. Prior to that, he held senior roles in companies such as ING, KPMG Accountants and AMP. David was previously Chairman of OAMPS Superannuation Trustee Board and currently serves as an independent Board Director for several companies.

David’s extensive experience in all forms of superannuation, including Self Managed Super Funds (SMSF), Defined Benefit Funds, retirement funding through Account Based Pensions, stockbroking with a focus on Direct Share Investment, Taxation/Remuneration Planning, Centrelink, Aged Care and business management, equip him to advise expertly on all aspects of Financial Advice.

Those with a particular interest in superannuation/SMSFs, direct share investment, salary packaging or applying for the Centrelink Pension will find his knowledge and ability in formulating and implementing creative, logical and simple wealth creation strategies a valuable asset.

David maintains a strong personalised client service focus, providing tailored solutions for clients.

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David Forrest is an Authorised Representative of Integrity Financial (SA) Pty Ltd ABN 16 133 921 187 — AFSL No 334846

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Michelle Forrest

Business Finance Manager
B Bus (Acc), CPA

Michelle’s career has spanned across the Financial Services, Retirement Living and Aged Care industries working in the private sector, not for profit and more recently with the state government for over 20 years. Her experience extends to many facets of the financial services industry, having worked in superannuation administration, technical support and financial planning practice administration.

Commencing with AMP and subsequently working in commerce and accounting roles with companies such as Brambles, Adelaide Bank Retirement Services, ECH Inc and SA Health and Wellbeing, Michelle returns to financial services after working in practice financial management at Henderson Gregory Forrest. This wide range of experience from senior accounting and management roles has provided Michelle with a strong background in business administration.

With an astute financial acumen and keen interest in business improvement strategies, Michelle ensures the smooth running of the Integrity Financial Advisory practice providing valued management support to our personalised client service focus.

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Jasmine Smith

Jasmine Smith

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Jasmine has worked in the financial services industry for over 12 years in all areas of client administration, working with David since 2013.

Jasmine has extensive knowledge and experience in client service including implementation of advice, portfolio reporting, assisting with the establishment of Self Managed Super Funds (SMSFs), term deposit management and a long history of helping clients with their enquiries.

Jasmine’s attention to detail, yet gentle approach, means she is able to solve the trickiest of questions for our client community.

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Merrilyn Smith

Senior Client Service Manager

Merrilyn has worked in the financial services industry for over 11 years in all areas of client administration, and is a new addition to our client services team, returning from Melbourne to join the team in June 2019.

Merrilyn has extensive knowledge and experience in client service including implementation of advice, managed fund administration, assisting with the establishment of Self Managed Super Funds (SMSFs) and process improvement for the previous practices she has worked with. Merrilyn’s experience with direct shares constitutes the other part of our administrative support for direct equity investments.

Merrilyn’s warm and caring nature continues to endear her to our clients and she has already established herself as a valued member of our team.

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