The greater the number of members in a self-managed superannuation fund, the more risk averse they become, according to latest research.
A joint report from SuperConcepts and the University of Adelaide's International Centre for Financial Services reveals SMSF funds with more members tend to shun riskier equity markets and invest more heavily in cash, a lower risk asset class and one that more investors are familiar with.
The report also suggests men are bigger risk takers than women with male SMSF members holding a greater share of their assets in higher-risk investments such as domestic shares and property.
SuperConcepts general manager of technical services and education Peter Burgess said the results were interesting as they highlighted two complimentary behavioural factors - gender bias and group behaviour - that have a significant influence on the way SMSFs allocate their assets.
"While SMSF funds with more male members tend to invest in more risky assets, our findings also show that funds with a greater number of members tends to prefer safe allocations by investing more in cash," Burgess said.
"Taken together, these results suggest that gender and group behaviour bias work in opposite directions. Lower investments in cash attributed to gender bias get cancelled by group behaviour bias, with the net effect resulting in a reduction in cash holdings over time."
Burgess added: "This research is important as awareness leads to action. If trustees are aware of their biases they can try to overcome them. This will go a long way towards making sure any investment decisions they make are in their best interests and will meet retirement and other long-term financial goals."
Professor Ralf-Yves Zurbrugg from the University of Adelaide said academic studies have also shown that the desire for social acceptance leads individuals to behave differently when they behave in a group.
"Group behaviour can either exacerbate or counteract the effects of behavioural biases. In the context of investing, group behaviour seems to encourage less risky positions," Zurbrugg said.
Using longitudinal data on 20,121 SMSFs between 2008 and 2015, the report showed cash holdings have experienced a decline in weight since 2008 - from 23% in July 2008 to 15% in July 2015. Meanwhile allocation to property and domestic shares has been relatively stable.