The SMSF Association engaged the University of Adelaide to explore the relationship between fund size and investment performance.
This research venture is based on financial statement data from over 318,000 SMSFs for the period 2017 to 2019. This is a significant sample representing more than 50% of the entire SMSF population.
The research establishes a new threshold at which an SMSF becomes competitive with APRA regulated funds, and shows for suitable individuals, an SMSF can be a viable option for individuals with lower superannuation balances than previously thought.
Understanding Self-Managed Super Fund Performance
Historically, comparisons between SMSFs and APRA funds have been difficult to make, due to the different formulas applied to measure their performance and the different methods used to calculate the data.
This research study overcomes many of these differences by using SMSF financial statement data (rather than data from SMSF Annual Returns) and a calculation methodology which is directly comparable with the way APRA calculates returns for APRA regulated funds. It provides a more realistic picture of the minimum capital required for an SMSF to achieve comparable investment returns with much larger funds, and how a diversified asset allocation can contribute to overall performance.
In their guidance to licensees and advisers on the disclosure of SMSF costs (INFO 206), ASIC states that “on average, SMSFs with balances below $500,000 have lower returns after expenses and tax than funds regulated by APRA”.
The research data revealed no material differences in performance patterns for SMSFs between $200,000 and $500,000, so the notion that smaller SMSFs in this range deliver materially lower investment returns, on average, than larger SMSFs in this range, is not supported by the research results.
The research results suggest a more appropriate threshold is $200,000.
Not an SMSF Association member?
Although SMSFs are not for everyone, this research is good news for individuals wanting more control over how their super savings and managed and invested. For individuals who have the time and expertise to manage their own super fund, this research suggests SMSFs with balances of $200,000 or more can achieve comparable investment returns with much larger funds.
ADDITIONAL RESOURCES
Academic Paper | Understanding self-managed super fund performance
The SMSF Association engaged the University of Adelaide to examine the overall financial performance of self-managed super funds (SMSFs) compared to APRA-regulated funds. This joint research venture is based on financial statement
Fact Sheet | Understanding self-managed super fund performance
The SMSF Association engaged the University of Adelaide to examine the overall financial performance of self-managed super funds (SMSFs) compared to APRA-regulated funds. This joint research venture is based on
Research Summary | Understanding self-managed super fund performance
The SMSF Association engaged the University of Adelaide to examine the overall financial performance of self-managed super funds (SMSFs) compared to APRA-regulated funds. This joint research venture is based on financial statement
White label documents | Understanding self-managed super fund performance
The SMSF Association engaged the University of Adelaide to examine the overall financial performance of self-managed super funds (SMSFs) compared to APRA-regulated funds. This joint research venture is based on
IN THE NEWS
SMSF Association Media Release
The investment performance of a typical self-managed super fund (SMSF) improves as the fund balance approaches $200,000. Once this threshold is reached the fund achieves comparable investment returns with APRA regulated funds, according to comprehensive research released today by the University of Adelaide’s International Centre for Financial Services (ICFS).
The investment performance of a typical self-managed super fund (SMSF) achieves comparable investment returns with Australian Prudential Regulation Authority (APRA) regulated funds once the balance passes $200,000, according to research.
Newly-released research has confirmed that the investment performance of self-managed superannuation funds (SMSFs) is comparable to that of Australian Prudential Regulation Authority (APRA) funds, but only with balances over $200,000.
New research shows that ASIC’s emphasis on minimum SMSF balances of $500,000 is “excessively conservative”, with the evidence suggesting that $200,000 may be a more appropriate threshold.
First published in the Financial Review on 23 February 2022.
Size matters when it comes to the investment performance of self-managed super funds (SMSFs), but not as much as we’ve been led to believe.
ASIC is currently in the process of reviewing research released last month on SMSF performance and minimum balances and will consider its implications on its guidance.
Self-managed superannuation funds with over $200,000 in assets perform “on par” with APRA-regulated funds according to research from the University of Adelaide.
The investment performance of a typical self-managed super fund (SMSF) improves as the fund balance approaches $200,000. Once this threshold is reached the fund achieves comparable investment returns with APRA regulated funds, according to comprehensive research released yesterday by the University of Adelaide’s International Centre for Financial Services (ICFS).
SMSFs that had assets above $200,000 and were not concentrated in cash and term deposits had performance on par with Australian Prudential Regulation Authority (APRA)-regulated funds, according to new research commissioned by the SMSF Association.
The latest research into SMSF investment returns has revealed significant holdings in one particular asset class was the common denominator in funds that showed underperformance compared to their Australian Prudential Regulation Authority (APRA)-regulated counterparts.
SMSF Association Media Release
The SMSF Association welcomes adjustments made by the Australian Tax Office (ATO) to align their SMSF performance calculations more closely with the methodology used by the Australian Prudential Regulation Authority (APRA) to calculate returns for APRA-regulated funds.
Whilst the ATO’s revised approach to SMSF investment performance will reduce the methodology gap with APRA, the SMSF Association cautions against using the statistics for comparisons with APRA funds.
The SMSF Association welcomes adjustments made by the Australian Tax Office (ATO) to align their SMSF performance calculations more closely with the methodology used by the Australian Prudential Regulation Authority (APRA) to calculate returns for APRA-regulated funds.
About the SMSF Association
The SMSF Association is the leading authoritative voice for the self managed superannuation (SMSF) fund sector, established to improve the quality of advisors, the knowledge of trustees and the credibility and health of a vibrant SMSF community.
The Association’s core beliefs embrace every Australian having the right to a good quality of life in retirement and having the right to control their own destiny.