The SMSF sector has continued to show its resilience and appeal to fund members during recent market movements, according to the SMSF Association, which has highlighted the ongoing asset growth of the sector.
Pointing to superannuation performance figures for the June quarter 2022 recently released by the Australian Prudential Regulation Authority (APRA), the association noted that for the 12 months to 30 June, SMSF assets grew by 3 per cent, from $843.7 billion to $868.7 billion, and SMSFs were the only superannuation sector to increase assets under management.
In comparison, APRA-regulated fund assets fell by 1.1 per cent from $2266.2 billion to $2241.0 billion and total superannuation assets fell 0.5 per cent, from$3327.9 billion to $3312.5 billion.
APRA stated the decrease in total assets “reflected volatility in financial markets following global interest rate increases in response to high levels of inflation, constrained supply chains and the ongoing uncertainty due to the conflict in Ukraine”.
SMSF Association chief executive John Maroney said the increase in SMSF assets during a time of market volatility and the continuing impact of COVID-19 “tells a story of remarkable resilience by the SMSF sector”.
“It has been underpinned by strong growth in fund establishments, rising property prices and, given the higher proportion of members in pension phase, more defensive asset allocations,” Maroney said, adding ATO statistics to the end of March showed cash and term deposits were $147 billion, or 17.2 per cent, of total SMSF assets.
“What’s particularly encouraging for our sector is the rising number of fund establishments by people under the age of 45, with more than 10,000 funds being set up in 2021/22.
“This should not surprise. In the wake of the global financial crisis in 2008, there was an upsurge in SMSF establishments as people reacted to the poor investment returns and now the ongoing pandemic and recent market volatility are causing a similar trend.
“This time around it’s being compounded by the fact that superannuation is now a much larger asset relative to their overall wealth, so it’s not surprising many superannuation fund members are wanting to have greater involvement with their retirement savings.
“When coupled with the benefits of SMSFs in terms of flexibility, the ability to join forces with your spouse to save for retirement, unique tax and estate planning opportunities and portability, then the growing attraction of SMSFs to a younger cohort is understandable.”
