SMSFs retarding growth in Australia: Credit SuisseBY LAURA MILLAN | WEDNESDAY, 29 JAN 2014 12:50PMSelf-managed super funds (SMSFs) "are retarding growth in Australia" by controlling much of the equity that could be used for new investment and demanding dividend increases instead. Related News |
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Isn't this just a reflection of an ageing and increasingly retired population that is more interested in income than growth?
It has actually been companies choosing to pay higher dividends as they view that expansionary measures are too costly at the moment. This is certainly true in the mining sector. Business expansion should only ever be targeted where it can be done at a profit.
The other reason for demanding income return along the way is that the investment market can be so volatile these days that you need investment return along the way, not just when you sell the asset.
Corporate bonds are a product subject to capital value movements whilst coupon returns are subject to RBA benchmarks. Also corporate bonds don't have the trading flexibility that shares do.