SMSFs achieve positive return on assets

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SMSF sector continues to grow with positive return on assets.

The latest statistics from the ATO have revealed the SMSF sector is continuing to grow, with positive returns on assets, and increasing fund and member numbers.

The “Self-Managed Superannuation Funds: A Statistical Overview 2015-16” report revealed in the five years to 2016/17, SMSFs grew by 26 per cent to 597,000 with total assets worth $697 billion.

In addition, SMSFs experienced a positive return on assets of 2.9 per cent during 2015/16.

The overview found SMSFs accounted for 99.6 per cent of all superannuation funds and 30 per cent of the $2.3 trillion in total superannuation assets in Australia.

“SMSFs have experienced annual positive growth for the five years to 2016 and are in line with the return on the investment achieved by Australian Prudential Regulation Authority (APRA) funds of more than four members,” ATO SMSF segment assistant commissioner Kasey Macfarlane said today.

“In 2015/16, both SMSFs and APRA funds reported the same return of 2.9 per cent.”

This year, the ATO revised its data set used to determine SMSF trustee structure.

“Last year we reported 77 per cent of SMSFs had an individual trustee structure, however, moving to this more reliable data set has resulted in significant changes – at 30 June 2017, 57 per cent of SMSFs had a corporate trustee,” Macfarlane revealed.

The data also demonstrated interesting trends in relation to SMSF member demographics and borrowings.

“While we continue to see strong growth in average member balances overall at 26 per cent over the last five years, female members have grown their balances at a higher rate than their male counterparts, at 30 per cent and 22 per cent respectively, over the last five years,” Macfarlane noted.

“We also continue to see a decrease in the median age of new members in newly established funds.

“In 2016, the median age was 47 years compared with 50 years in 2012. This tells us that more trustees are entering the SMSF sector at an earlier stage in their working life than in previous years.”

The annual overview also reported that in 2015/16, 7 per cent of SMSFs held assets under limited recourse borrowing arrangements (LRBA), slightly higher than the prior year at 6 per cent.

“The value of estimated assets held under LRBAs as a proportion of total SMSF assets remained relatively low in 2015/16 at approximately 4 per cent,” Macfarlane said.

“Additionally, we continue to see that real property assets make up over 90 per cent of the total value of LRBA investments by SMSFs.

“SMSF LRBA assets are supported by borrowings. Our current data cannot distinguish the level of total borrowings by SMSFs related to LRBAs specifically.”

At June 2016, the estimated value of total SMSF borrowings was equivalent to 3 per cent of total SMSF assets.

The proportion of SMSFs with total borrowings increased from 4 per cent in 2012 to 9 per cent of funds in 2016.

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