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LRBA, Superannuation

Sector growth unimpeded by COVID-19

SMSF sector growth

The growth of the SMSF sector has continued into a third successive quarter after taking a small hit at the height of the coronavirus pandemic.

The growth of the SMSF sector continued at a steady pace through the second half of last year and into 2021 with nearly 6000 new funds established in the first quarter of the year, according to the ATO.

In its “SMSF Statistical Report for March 2021”, released today, the ATO reported 6147 funds were established in the first three months of the year, while 240 funds were wound-up, for a net establishment of 5907 funds in the quarter and a total of 597,396 SMSFs in operation.

This continued on from the increases in the September and December quarters of 2020, which recorded 5808 and 5102 net establishments respectively, and a rise in total members in SMSFs from 1,101,660 at the end of the September quarter 2020 to 1,120,936 members at the end of the March quarter 2021.

The three successive quarters of sector growth follow a decline in the June quarter 2020 when 9001 funds were wound up compared to 4591 funds being established, and total SMSF membership declined by 8842 to 1,088,882.

The largest group by age to set up a fund in the March quarter were those in the 35-44 bracket, who established 34.3 per cent of new funds, followed by those in the 45-49 age group, who established 18.4 per cent of new funds.

The taxable income range that had the highest number of establishments was the $100,000 to $150,000 bracket, which accounted for 18.5 per cent of new funds, followed by the $80,000 to $100,000 bracket, which accounted for 13.8 per cent of new establishments.

In line with the increase in total funds and members, the total estimated assets of SMSFs increased to $787.1 billion in the March quarter, up from $763 billion in the previous quarter.

The top asset types held by SMSFs by value were listed shares, and cash and term deposits, with 26 per cent and 19 per cent respectively of total estimated SMSF assets.

Limited recourse borrowing arrangements (LRBA) made up around 7.5 per cent of total SMSF assets at $59.36 billion, but increased by $3.5 billion over the quarter from $55.8 billion.

This was the most substantial increase in LRBA assets since December 2019 when they rose from $51.4 billion to $53.68 billion, and from that time until December 2020 LRBA investments rose by around $500 million each quarter.

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