The main motivating factor of control, in relation to SMSF establishments, is not driven purely by a desire to generate better investment returns, a senior funds management executive has said.
“Control is more than just performance. I’ve certainly sat in on research interviews with SMSF trustees where they’re prepared to trade off performance, and have lower performance in their SMSF, on the basis they’ve got control,” Vanguard head of corporate affairs Robin Bowerman said.
The “Vanguard/Investment Trends 2021 SMSF Investor Report” showed between 2015 and 2021, 72 per cent of trustees cited having more control of their investments as the main reason why they started an SMSF and another 52 per cent said they were motivated to run their own super fund to achieve better returns.
Investment Trends head of research Irene Guiamatsia noted the responses were related to levels of transparency within public offer funds, as well as the restricted asset classes these retirement savings vehicles traditionally offer.
“If you look at super member engagement research, we see very few members actually know which investment options they are in, let alone know which [assets] are underneath those investment options,” Guiamatsia said.
“So if you are someone who likes to know everything, you perhaps want to own certain things … [for example] if I actually want to invest in Tesla, or if you want to invest in an investment property or some other very specific thing you want or perhaps ESG (environmental, social and governance) [an SMSF has proven to be appealing].
“For that pool of people often they don’t feel that they know what is going on and if they would like to have that control, that tends to be a huge driver of setting up an SMSF.”
The “Vanguard/Investment Trends 2021 SMSF Investor Report” analysed responses from an online survey conducted among SMSF trustees between March and April.
