The SMSF Association has revealed it will be releasing more in-depth SMSF investment performance data later in the year to enable more accurate comparisons to be performed against other sectors of the superannuation industry.
The information is intended to build upon the Rice Warner research commissioned by the SMSF Association in conjunction with SuperConcepts released in November 2020. This study found SMSFs with asset balances of between $200,000 and $500,000 slightly underperformed industry funds in 2017 and 2018.
Specifically, the report revealed the median investment return of SMSFs in this asset balance range in 2017 was 7.07 per cent in 2017 and 6.02 per cent in 2018. This compared unfavourably to industry funds, which generated returns of 9.1 per cent for 2017 and 8.5 per cent for 2018.
SMSF Association deputy chief executive and policy and education director Peter Burgess admitted these results were unsurprising, but added they did not represent the most accurate comparison possible.
“When you look at the asset allocation of these smaller funds, they do have a large weighting towards cash and term deposits and with interest rates so low, it’s not surprising that we’re seeing funds with those smaller balances underperform APRA (Australian Prudential Regulation Authority) [regulated] funds,” Burgess said during today’s Topdoc’s Technical Update webinar.
“What we are looking to do for future research though is to really drill down on this segment between $200,000 and $500,000 and try to benchmark the performance of these funds against relevant benchmarks.
“What we’re trying to do there is strip out those clients who have made a conscious decision to invest in cash, either because that’s their risk profile or because they’re waiting for more money to come into the fund so they can invest, versus those funds of that size that have made a conscious decision to invest into the market.
“So we think by comparing to relevant benchmarks we can really drill down and really see if there is an underperformance issue here at these ranges.
“So that’s some research that we hopefully will be able to release later in the year.”
