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 January 2016. The ATO will provide updated performance data (for year ending 30 June 2015) in late 2016.
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 inexperienced investing, and bad investment decisions. Until relatively 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 had outperformed the large fund sector (corporate, industry and retail funds in three years out of eight, and performed equally in another year. Over the 8-year period to 30 June 2014 however, SMSFs outperformed the large fund sector, just!
SMSFs outperform over the long term, on average
When you look at the average annual return over the 8-year period that the ATO statistics cover, the recent outperformance by the large fund sector does not prevail over the longer term. Based on the figures in the table below (see later in article), the average annual return over the 8-year period to 30 June 2014, is:
- 4.99% a year, for SMSFs
- 4.8% a year, for large super funds.
In anyone’s language the long-term averages listed in the bullets above are not impressive for either category of super fund, but note that the Global Financial Crisis occurred during this period.
We will be able to get a better sense of long-term investment performance when the ATO releases the 2015 financial year performance data.
Important: The average return figures for 8 years listed above are calculated by SuperGuide, and are not official ATO figures (since the ATO does not produce these calculations). The calculations however are based on official data appearing in the table below, sourced from several ATO reports. Some yearly returns have been adjusted by the ATO over time, and these adjustments are incorporated into the table below. Several investment websites have been publishing previous versions of the SuperGuide calculations, and relying on our analysis, without attributing our site as the source or seeking SuperGuide’s permission. Instead, they are quoting the 8-year averages (or 7-year average annual returns from previous editions) as ATO official figures.
Large funds outperform SMSFs on a year-by-year basis
Now that updated performance figures for the 2014 financial year are available (delivering 11.7% for large funds, compared with 9.8% for SMSFs for 2014 year), the large fund sector wins the outperformance year-by-year debate. With the adjustment to the performance figures for the 2014 financial year, the large fund sector can now claim to outperform SMSFs 4 years out of eight.
SMSFs outperformed large super funds for the three years ended 30 June 2007, 30 June 2008, 30 June 2009, but large super funds performed better for the years ended 30 June 2010, 30 June 2011, 30 June 2013 and 30 June 2014. For the year to 30 June 2012, both SMSFs and the large fund sector each delivered 0.4%, according to the ATO.
|Financial year||SMSFs (%)||Large funds (%)||Outperformer|
|2008||-5.9% (loss)||-8.1% (loss)||SMSF|
|2009||-6.7% (loss)||-11.5% (loss)||SMSF|
|2012||0.4%||0.4%||SMSF and Large funds|
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 six ATO reports: SMSFs — A statistical overview 2013-2014, SMSFs – A statistical overview 2012-2013, SMSFs – A statistical overview 2011-2012, 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.
For more information on investment performance and asset allocation see the following related SuperGuide articles:
- SMSF confidential: the inside story on DIY super funds
- SMSF investment: Three most popular asset classes, and the rest
- Asset classes: Naming the investment winners for the 2014/2015 financial year
- Asset classes: Naming the investment winners for the 2015 calendar year
- Asset classes: Naming the investment winners for the 2015/2016 financial year
You can also check out the following ATO reports on the ATO website:
- Self-managed super fund: A statistical overview 2013-14
- Self-managed super funds: A statistical overview 2012-13
- Self-managed super funds: A statistical overview 2011-12
- Self-managed super funds: A statistical overview 2010-11
- Self-managed super funds: A statistical overview 2009-10 (no longer available online)
- Self-managed super funds: A statistical overview 2008-09 (no longer available online)