The investments SMSFs typically make have continued to outperform those of larger super funds, at least over the short term.
SuperGuard 360 compares the performance of investments SMSFs make, based on ATO statistics, to those of the default MySuper products of large super funds. For the year to August 2018 the SMSF index was up 11.0% before fees and taxes, compared to 10.9% for the MySuper index.
In the 12 months to July 2018 the SMSF index was up 10.5% compared to 10.2% for the MySuper index.
SuperGuard 360 says that three quarters of all SMSFs have total assets under $1 million, and that these funds have higher allocations to cash and less to shares than “larger higher performing SMSFs which hold the majority of SMSF assets”.
“This means that the majority of SMSF members are in funds likely to achieve lower than ideal investment outcomes.”
Despite this the SMSF index also outperformed the MySuper index over 3 years, returning 8.4% per annum compared to 8.3% for MySuper funds.
However over long time period the MySuper investment allocation has outperformed – 8.5% to 7.3% p.a. over 5 years and 6.3% to 5.9% over 10 years.
The difference may appear small, but SuperGuard 360 calculates that $100,000 invested in the MySuper index 10 years ago would now be worth $184,702 – which is $7,163 more than the same amount invested in the SMSF index.
Of course, as is often said, past performance is not an indicator of future performance.
SuperGuard 360 provides services to SMSFs, and is owned by Rainmaker Information.