SMSF returns for the year to March 2018 were 2.0% lower than if they had invested the same as MySuper products.
SMSF returns for the period were 5.4% compared to 7.4% for default MySuper products, according to indices compiled by SuperGuard 360.
SuperGuard 360 calculates two indices to compare the return an SMSF would receive if investing as per the SMSF asset allocations in ATO statistics – the SG360 SMSF reference index – and the returns an SMSF would receive if they invested the same as the typical APRA-regulated MySuper product – the SG360 default index.
“Generally speaking SMSFs have a higher weighting to property than do MySuper options and a lower weighting to equities in general and international equities in particular,” said SuperGuard 360.
SuperGuard 360 said the lower performance of SMSFs was the result of lower weightings to growth assets, especially international equities.
“Three quarters of all SMSFs are small having assets less than $1 million. These funds, according to official ATO figures, have much higher weightings to cash and lower weightings to equities than larger higher performing SMSFs which hold the majority of SMSF assets,” said SuperGuard 360.
“This means that the majority of SMSF members are in funds likely to achieve lower than ideal investment outcomes. To ensure their retirement savings last as long as they do, SMSF members should review the amount they pay in fees and benchmark their portfolio to ensure it is achieving the returns they are expecting. If they are achieving lower investment returns than the benchmark it is important they understand why.”
The SG360 default index has recorded higher returns compared to the SG360 SMSF reference index over 1, 3, 5 and 10 years. Over ten years the default index was 0.4% higher per annum, at 5.7% compared to 5.3% for the SMSF reference index. Though there are some points in time where the reference index has higher gains, or lower loses, than the default index.
SuperGuard 360 provides services to SMSFs, and is owned by Rainmaker Information.