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 2017. The ATO will provide updated performance data (for year ending 30 June 2016) in December 2017.
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. Until this year, SMSFs had consistently outperformed the large fund sector over the cumulative timeframe (past 8-year period), but the large fund sector (corporate, industry and retail funds) have outperformed SMSFs in six years out of nine, and performed equally in another year. Over the 9-year period to 30 June 2015 however, the large fund sector outperformed SMSFs, just!
Note: Although not discussed in the ATO’s statistics, SuperGuide considers a possible reason for the outperformance by the large fund sector in recent times, is that SMSFs are traditionally overweight in cash and Australian shares. With low interest rates and a volatile sharemarket, this asset allocation has delivered lower returns compared with the large fund sector’s higher weighting in unlisted assets such as infrastructure and property, which have performed comparatively well. The older demographic of SMSF members, compared with large fund members, also may indicate that assets are held in more conservative allocations to allow liquidity for pension payments, and hence delivering a lower return overall. It would be interesting to see the performance statistics on SMSFs for those funds not in pension phase.
Large funds outperform over the long term, on average
When you look at the average annual return over the 9-year period that the ATO statistics cover, the recent outperformance by the large fund sector has now prevailed over the longer term, for the first time. Based on the figures in the table below (see later in article), the average annual return over the 9-year period to 30 June 2015, is:
- 5.10% a year, for SMSFs
- 5.26% 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 2016 financial year performance data.
Important: The average return figures for 9 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 9-year averages (or 8-year 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 2015 financial year are available (delivering 8.9% for large funds, compared with 6.2% for SMSFs for the 2015 year), the large fund sector wins the outperformance year-by-year debate. With the adjustment to the performance figures for the 2015 financial year, the large fund sector can now claim to outperform SMSFs six years out of nine.
SMSFs outperformed large super funds for the three financial years ended 30 June 2007, 30 June 2008, and 30 June 2009, but large super funds performed better for the 6 years ended 30 June 2010 through to 30 June 2015, according to the ATO. Note that for the financial year ended 30 June 2012, both SMSFs and large funds delivered a return of 0.4%, until the ATO recently adjusted the annual return for SMSFs for that year to 0.3%.
|Financial year||SMSFs (%)||Large funds (%)||Outperformer|
|2008||-5.9% (loss)||-8.1% (loss)||SMSF|
|2009||-6.7% (loss)||-11.5% (loss)||SMSF|
|Average annual return over 9 years||5.10%||5.26%||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 seven ATO reports: SMSFs — A statistical overview 2014-2015, 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 SMSF investment performance and asset allocation see the following related SuperGuide articles:
- SMSF confidential: the inside story on DIY super funds
- SMSF investment: What assets do DIY super trustees prefer?
- Asset classes: Naming the investment winners for the 2016 calendar year
- Asset classes: Naming the investment winners for the 2015/2016 financial year
- Asset classes: Naming the investment winners for the 2015 calendar year
- Asset classes: Naming the investment winners for the 2014/2015 financial year
You can also check out the following ATO reports on the ATO website:
- Self-managed super funds: A statistical overview 2014-15
- Self-managed super funds: 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)