The majority of self-managed superannuation funds (SMSFs) outperformed the broad Australian sharemarket in 12 months to the end of June, 2008, according to data released yesterday at the Self-Managed Superannuation Fund Professionals’ association of Australia (SPAA) 2009 convention in Adelaide.
The average gross return of 4500 SMSFs surveyed was -11.64 per cent in the year. The funds had average expenses of just over 2 per cent, giving an average net return of -13.73 per cent.
Over the same period, the S&P/ASX300 Index returned -13.67 per cent. However, the research reveals that 54 per cent of SMSFs performed better than the S&P/ASX300 Index and just over half performed better than the S&P/ASX100 Index.
But the dispersion of SMSF returns was wide, with a handful of funds – 129 out of the 4500 surveyed – suffering a loss of more than -50 per cent for the year, and another small group returning 50 per cent or more.
Professor Ralf Zurbrugg, chair in finance at the University of Adelaide’s school of finance, said “the bulk” of returns of the funds surveyed fell in the range of -30 per cent to 10 per cent.
“SMSFs have performed quite well,” he said.
The research also revealed some striking similarities and contrasts in the asset allocation of the SMSFs surveyed and the asset allocation of the average default fund. Generally, the asset allocation of SMSFs has remained steady over the past three years.
Zurbrugg said the holdings of cash and fixed income assets were very broadly similar, at 20 per cent for SMSFs and 26 per cent for default funds.
SMSFs held about half their money in equities – virtually identical to default funds’ 52 per cent – but the big difference was that almost half the default funds’ equities allocation was held offshore, while SMSFs had almost no money invested abroad at all.
The sample of SMSF funds in the SPAA research had 40 per cent greater asset values than recorded in the latest Australian Prudential Regulation Authority (APRA) Superannuation Bulletin.
The SPAA figures suggest an average fund size of more than $1.5 million, while APRA puts the figure at about $924,000.
The research also found SMSFs to be competitive with industry and retail super funds on expenses.
The chief executive of SPAA, Andrea Slattery, said the aim of producing data on the SMSFs was to help demystify the sector.
“Ultimately it is there as evidence, and it gives the market some structure,” Slattery said.
“Most people do not know what the SMSF market is – they are frightened of it.
“[So the research] is there for education, policymaking and having real information to talk about, rather than something that’s been invented or based on one particular matter.”
Slattery said the Rudd Government has said it will base policy decisions solely on evidence, and until there was hard, reliable evidence about the structure and economics of the SMSF sector there should be no policy made.
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