SMSF returns are competitive with large funds

As more Australians embrace self-managed super funds (SMSFs), taking control of your retirement savings has the potential to beat returns achieved by large super funds, but it’s far from a given.

Market conditions play a role, SMSFs tend to outperform large funds regulated by the Australian Prudential Regulation Authority (APRA) in depressed markets and underperform in good years. More on this later.

But there is also a much bigger gap between the best- and worst-performing SMSFs than there is for large APRA funds.

The good news is that SMSFs have consistently outperformed large APRA funds over five years.

These were the key findings of the Self-managed Super Fund Performance 2023–24 (the Report), conducted annually since 2017 by the University of Adelaide for the SMSF Association.

The Report analysed returns from over 400,000 SMSFs in the 2024 financial year, the latest available due to the lag in SMSF reporting. This represents more than 65% of the entire SMSF population.

SMSFs underperform in the short term

As mentioned above, SMSFs tend to underperform large APRA funds in years when markets are buoyant. This is even more pronounced when global shares outpace the domestic market, as they did in the 2024 financial year.

While large funds typically invest a significant proportion of their assets in global markets, SMSFs are heavily weighted to Australian shares. In fact, the 2025 Class Benchmark Report found 64% of SMSFs held Australian shares while just 10% held international shares.

In 2023–24, Australian shares returned a healthy 11.9%, but international shares were up almost twice that, at 21.5%. This is reflected in the table below, which shows a median rate of return (ROR) for SMSFs of 7.2%, trailing the median APRA fund return of 8.6% – a difference of 1.4%. (The median return is the point where half of all funds performed better and half performed worse.)

Source: Self-managed Super Fund Performance 2023–24

However, what is striking from this table is that the top 25% of SMSFs outperformed APRA funds, returning 13.0% compared to 9.5%. Conversely, the bottom 25% of SMSFs significantly underperformed APRA funds, returning 1.9% compared to 8.0%.

Put another way, in 2023–24, the middle 50% of SMSFs achieve returns of between 1.9% and 13.0%, whereas the middle 50% of APRA funds achieve returns of between 8.0% and 9.5%. This substantial difference in SMSF and APRA fund performance distributions is consistent with previous years. 

In previous years, the Report has suggested that one reason for APRA funds’ narrower range of returns could be a tendency toward ‘benchmark hugging’. While this trend seems to be stabilising, another factor in the narrow range of returns is the ongoing consolidation in the APRA fund sector, with the total number of funds reducing from 96 in the 2023 financial year to 85 in 2023–24.

Interestingly, the performance results flipped when the Report looked at average rather than median returns. While the average SMSF return was 8.4%, the average APRA fund return was 8.3%. This is a small difference, but it’s the first time it’s been observed. The Report says this is due to a large minority (25%) of SMSFs achieving rates of return significantly above the typical performance of an individual fund, pulling the average performance higher across the sector.

But other factors also play a role in the performance of SMSFs.

Size matters, up to a point

While the latest Report didn’t look at the size of SMSFs, the previous report did. It found around 11% of the SMSFs in the study had less than $200,000 in assets, which dragged down the overall performance of the sector. Small funds tend to have a higher allocation to cash and less ability to optimally diversify their investments. Previous iterations of this Report also found high levels of cash and too little or too much diversification reduced returns.

This added further weight to earlier research by Rice Warner that found SMSFs with balances of $200,000 or more were cost-effective compared with industry and retail super funds.

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The previous Report also looked at the effect on performance, if any, of getting advice. It found the median return of advised SMSFs (7.6%) was significantly higher than the median return of non-advised SMSFs (6.4%) and was edging closer to the median APRA fund return of 8.4%.

However, the top 25% of non-advised SMSFs outpaced the top 25% of both their advised peers and APRA funds. Go figure.

SMSFs meet and beat large funds over five years

One-year returns are interesting, but we all know that super is a long-term investment.

As the University of Adelaide has been conducting its research on SMSF performance since 2016–17, it now has annualised rates of return for multiple rolling five-year periods to June 2024. For this comparison, the researchers used average returns, not median returns, and removed outlier funds at the top and bottom of the SMSF and APRA samples.

As you can see in the table below, SMSFs outperformed APRA funds on an annualised basis over rolling five-year periods to June 2022, 2023 and 2024 by between 1.1% and 1.3%.

Source: Self-managed Super Fund Performance 2023–24

The bottom line

The latest research shows that SMSF trustees can be confident that their fund can be competitive with APRA funds once it has assets of at least $200,000, especially over the long term.

The evidence also suggests returns may be enhanced by diversifying beyond the Australian sharemarket and by seeking professional advice.