National Conference 2022
We examine SMSF performance for a large sample of funds over the period 2017–2019. Historically, performance comparisons between SMSFs and APRA funds have been hampered by regulatory and methodological differences. We address these issues by constructing a Rate of Return (ROR) measure for SMSFs which relies on a comprehensive set of financial statement items. Our results allow us to benchmark SMSFs appropriately, demonstrating not only how their performance varies relative to APRA funds, but also how underlying characteristics such as fund size and asset allocation relate to fund performance.
The research also offers a key innovation. We introduce a new method for comparing overall return distributions in the sector, a method which is easy to implement and intuitive to understand. We find that SMSFs generally perform on par with APRA funds and that, while fund size remains an important factor in explaining performance, it is perhaps less important than we initially understood.
At the end of this session, you will be able to:
- Understand that Rates of Return for SMSFs can be generated and should be made publicly available at the aggregate level;
- End-user understanding of fund performance statistics likely benefits from the inclusion of return distribution summaries; and,
- Understand SMSFs with balances between $200,000 and $500,000 generate comparable returns to those generated by larger SMSFs.
The contents of this resource are taken to be correct at the time of publication.
Disclaimer: Technical Papers contain general advice only and are prepared without taking into account particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should assess its relevance to the individual circumstances of your client. While the SMSF Association believes that the information provided is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the Corporations Act 2001. © SMSF Association