Note: The ATO publishes an annual report about SMSFs for each financial year. This article covers the latest SMSF performance data available from the ATO, as at February 2012. The ATO will provide updated performance data (for year ending 30 June 2012) in early 2014.
A common argument put forward against individuals starting a self-managed super fund is that budding SMSF trustees could lose their hard-earned super savings through and inexperienced investing, and bad investment decisions. Until recently, there wasn’t much evidence confirming or denying this ‘world view’ mainly proffered by the large super fund sector.
The ATO now publishes SMSF performance data and the real story is quite startling. SMSFs have outperformed the large fund sector (corporate, industry and retail funds) in three years out of five.
SMSFs outperformed large super funds for the three years ended 30 June 2007, 30 June 2008 and 30 June 2009, but large super funds performed better for the years ended 30 June 2010 and 30 June 2011.
|Financial year||SMSFs (%)||Large funds (%)|
|2008||-6.3% (loss)||-8.15% (loss)|
|2009||-6.7% (loss)||-11.7% (loss)|
Note: While the methodology used to estimate SMSF performance resembles APRA’s, the data collected is not the same. The data in the table above is sourced from three ATO reports: SMSFs – A statistical overview 2010-2011, SMSFs-A statistical overview 2009-10, and SMSFs – A statistical overview 2008-09.
Source: Table created by SuperGuide using ATO performance data.
Although the ATO does not provide reasons for this SMSF outperformance, I suggest that the superior investment performance for SMSFs for the 2007, 2008 and 2009 years is linked to two main factors:
- Tax-effective investing, including taking advantage of franking credits from franked dividends from Australian shares
- Minimal exposure to overseas investment markets.
Again, the ATO does not provide reasons why large funds outperformed SMSFs in the 2009/2010 and 2010/2011 financial years but I suggest the following two reasons:
- Greater exposure to overseas investment markets
- Greater allocations to listed property trusts (REITs) both in Australia and overseas (compared to SMSFs).
- Greater holdings of cash held by SMSFs, compared with large funds
I invite readers to share their views in the comments section below on why SMSFs outperformed in the financial years 2007, 2008 and 2009, and why large funds outperformed SMSFs in the 2010 and 2011 financial years, from their own SMSF experience.
- SMSF confidential: the inside story on DIY super funds
- SMSF investment: Where does all of the DIY super money go?
- Asset classes: Naming the investment winners for the 2012 calendar year
You can also check out the following ATO reports on the ATO website:
- Self-managed super funds: A statistical overview 2010-11
- Self-managed super funds: A statistical overview 2009-10
- Self-managed super funds: A statistical overview 2008-09