SMSFs performed better than their Australian Prudential Regulation Authority (APRA)-regulated counterparts over the eight-year period between 2004/05 and 2011/12, according to industry research conducted by Rice Warner on behalf of National Australia Bank (NAB).
The study extracted return data that had been compiled and reported by both APRA and the Australian Taxation Office (ATO).
During the period, the statistics showed SMSFs generated a pre-cost average return of 7.7 per cent a year compared to APRA-regulated funds, which delivered an average yearly return of 4.9 per cent.
When comparing after-cost returns, SMSFs still beat the APRA-regulated superannuation funds as they generated an annual average return of 6.8 per cent compared to the competition, which produced an average return of 4.1 per cent per year.
Rice Warner also extrapolated the amount of value an individual would have received at the end of 2012 had they invested a sum of $500,000 in 2005 with no other superannuation activity, that is, contributions or withdrawals, over the period.
This data revealed the pre-cost balance of an SMSF at the end of 2012 would have been $904,975 compared to a balance of $732,259 in an APRA-regulated fund.
Again, the post-cost analysis also showed SMSFs won out with an estimated balance of $845,571 as opposed to an APRA-regulated fund balance of $690,100.
Commenting on the results, NAB banking and wealth solutions executive general manager David Gall said: “We now know that not only have more than a million Australians chosen to manage their own retirement savings, they’re actually doing a particularly good job of it.
“According to this comparison of ATO and APRA data, during the period of 2005 to 2012, the SMSF sector outperformed the rest of the superannuation industry in six of those eight years.
“It is clear that SMSFs do rate very well in terms of performance against the other funds, contrary to some perceptions out there.
“These people are taking responsibility for their own retirement, but that said, they are also seeking out and paying for good advice. It’s clear that many members and trustees are fully prepared to pay for advice if they believe it’s worth doing so.”
