$200,000 in assets a key threshold for SMSF performance

$200,000 in assets is a key threshold for the performance and diversification of an SMSF, according to new research.

Large SMSFs outperform small funds because they are more diversified, efficient and have more experience operating, according to research conducted jointly by SuperConcepts and the University of Adelaide’s International Centre for Financial Services.

Peter Burgess, SuperConcepts General Manager of Technical Services and Education, said the research shows that when an SMSF reaches a balance of $200,000 the benefits of investment diversification starts to kick in.

“Our research shows size matters with large SMSFs performing better than small ones. Performance, diversification and expense ratios continue to improve as a fund increases in size,” said Mr Burgess.

There is a “double whammy” for SMSFs under $200,000, according to University of Adelaide Professor Ralf-Yves Zurbrugg.

“These funds not only have much larger expense ratios compared to larger funds, but they also lose out due to their inability to achieve adequate levels of investment diversification,” said Professor Zurbrugg.

In addition to the $200,000 threshold, the research shows that funds with over $550,000 in assets have expense ratios below 2% and their performance and diversification is comparable with the largest super funds.

The research is based on data from more than 20,000 SMSFs from 2008/09 to 2014-15.

The University of Adelaide SMSF Centre of Excellence plans this as the first in a series of reports released which aim to “examine the relationship between fund activity and performance, diversification and performance, and the relationship between trustees seeking advice and performance”.

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  1. Pingback: SMSF Newsletter 6 February 2016 | Wealthtrac SMSF

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