SMSF Association Media Release
Investment returns for self-managed super funds (SMSFs) in the 2021-22 financial year show they outperformed the APRA fund sector by 4.1 percentage points – again demonstrating their resilience
in market downturns.
In a financial year where the bellwether S&P/ASX 200 index fell more than 10 per cent, the median SMSF only retreated one per cent compared with the median APRA fund that fell 5.1 per cent, according to research by the University of Adelaide’s International Centre for Financial Services (ICFS).
The 4.1 percentage point margin was the largest in the six years this research project has been conducted.
Based on 394,000 SMSFs (67 per cent of all SMSFs), the research also highlights that 38 per cent of SMSFs had positive returns in 2021-22 compared with less than five per cent of APRA funds.
Dr George Mihaylov, who heads the ICFS research project commissioned by the SMSF Association, says the SMSF performance results suggest that most funds are adequately diversified, indicating a key financial benefit for those SMSF trustees who get financial advice.
“In our opinion the outperformance by SMSFs was due, in part, to being underweight international
equities and overweight domestic equities in a year where the local market outperformed some
international markets.”
“We have shown in earlier research that less than two per cent of SMSFs hold international equities,
most often with allocated weightings that are low. This is in stark contrast with APRA funds, of which a much larger proportion diversify internationally, typically with larger weightings.”
“Although this home bias generally leads to sub-optimal levels of investment diversification, it can
also act to boost earnings and returns during periods where the domestic stock market outperforms some key international markets – precisely what happened in 2021-22 relative to the U.S.”
“Another contributing factor to this outperformance was that a substantial sub-group of SMSF
trustees pursue defensive asset allocations and defensive asset classes.”
Mihaylov adds that the 2021-22 research findings were consistent with previous studies.
“As expected, losses were also marginally exacerbated at the aggregate level for funds holding less than 80 per cent of their net assets in cash and cash equivalents.”
SMSF Association CEO Peter Burgess says: “This research contributes to the mounting evidence on the strong investment performance of the SMSF sector. Over the period 2017-2021, SMSFs have
outperform APRA funds in some financial years, and this now includes 2021-22.”
Commenting on the disparity between the 2021-22 SMSF sector median investment return reported last week by the ATO, and the median return released today (-1.8% versus -1.0%), Burgess said the
two are not a direct comparison as the data inputs and methodology used are different.
“The data inputs and methodology used by the University of Adelaide are more closely aligned with
the way the APRA fund sector calculates returns, so it provides a more reliable comparison of the relative performance of the two sectors.”
“From the Association’s perspective, what is particularly gratifying is the indication that those SMSFs
getting financial advice tend to perform better. It’s always been our mantra that SMSF trustees should get professional advice.”
View the full report and access the SMSF Association’s 2021-22 Performance Brief here.