New research released today by Adelaide University’s International Centre for Financial Services (ICFS), shows Self-Managed Super Funds (SMSFs) continue to demonstrate strong long-term performance, outperforming APRA-regulated funds over the previous 5-year period.
Over the five years to 30 June 2024, SMSFs achieved an average rate of return 1.1 percent higher than APRA-regulated superannuation funds, highlighting the sector’s capacity to deliver consistent long-term growth for members. This follows similar findings for the five years to 30 June 2023, where SMSFs similarly outperformed by 1.2 percent, demonstrating a pattern of sustained performance.
SMSF Association CEO, Peter Burgess said the research demonstrates the long-term strength and resilience of the SMSF sector, reinforcing its position as a competitive and enduring component of the superannuation system.
“SMSFs remain a compelling option when they are used under the right circumstances and managed effectively,” he said.
“For Australians seeking greater flexibility, control over investment decisions, estate planning advantages, and the ability to tailor strategies to their individual circumstances, establishing an SMSF can be a highly effective structure — particularly when supported by specialist professional advice.”
Successive years of near record fund establishments, and surpassing the total asset milestone of $1 trillion, both point to the growing attraction of the sector.
However, Mr Burgess once again stressed SMSFs are not for everyone and the importance of investors doing their own research and seeking specialist professional advice.
“This is particularly relevant given recent instances of unscrupulous operators using high pressure tactics, encouraging individuals to establish an SMSF despite it not necessarily being in their best interest.”
The Adelaide University research again shows a more significant spread in the range of performance outcomes for SMSFs relative to APRA funds, underscoring both the opportunities and risks involved.
While this does emphasise the importance of being supported by specialist professional advice for the best results, it also highlights the scale of opportunity and outperformance potential of SMSFs for aspirational Australian investors.
The top 25 percent of SMSFs achieved rates of return of at least 13 percent, compared with just 9.5 percent for the top 25 percent of APRA funds.
“This wide dispersion clearly shows the dual nature of SMSF investing,” Mr Burgess said.
“SMSFs can deliver exceptional outcomes, but without appropriate strategy and guidance, they can also significantly underperform. That variability reinforces why professional advice is so critical for trustees.
“Trustees who engage professional advisers are better positioned to manage risk, make informed decisions and adapt their strategies as markets and regulations evolve,” Mr Burgess said.
ICFS Project Lead, Dr George Mihaylov, said the SMSF sector has demonstrated remarkable resilience and strength in FY24, delivering competitive performance and continuing to demonstrate its medium-term value proposition over successive rolling five-year windows.
“The data once again highlights the distinct performance profile of SMSFs. While APRA funds outperform SMSFs at the median, stronger upper-tail outcomes in the SMSF sector often lift average SMSF returns above their institutional counterparts.”
“Our data suggest that a majority of SMSFs achieve performance outcomes that are either comparable to, or exceed, the performance of a typical APRA fund. However, we also consistently find a smaller cohort of SMSFs that need help, both in the way they allocate their assets and in terms of their scalability,” Dr Mihaylov said.