SMSF investment returns on par with large APRA-regulated super funds

SMSF investment returns are on par with those of large APRA-regulated superannuation funds, according to recent ATO data.

The SMSF Association said this was welcome news for the over 1 million people with an SMSF. The Association pointed to the, recently released, 2015/16 SMSF statistical overview as “strongly” supporting the view that SMSF members can effectively mange their retirement investment portfolios.

“This strong performance, the fifth consecutive year of positive returns, is also an endorsement of the SMSF specialists who advise many members about their investment portfolios,” said SMSF Association CEO John Maroney.

According to a comparison by the ATO, SMSF and APRA funds had the same average return in 2015/16, of 2.9%. Though APRA funds outperformed SMSFs in the prior four financial years.

Also, the ATO warns that “care must be taken when using SMSF performance figures, particularly when making comparisons.”

“While the methodology used to estimate SMSF performance resembles APRA’s methodology, the data collected is not the same.”

The SMSF Association says SMSFs have been growing in a “sustainable and robust manner”.

Maroney said that SMSFs were delivering on the objective of superannuation – to provide income in retirement – with more than 94% of SMSF benefit payments being taken as a pension in 2015/16.

“This high percentage of pension use by SMSFs has been a consistent positive aspect of the sector as highlighted in the ATO’s annual statistical publication over a long period,” said Maroney.

The SMSF Association also welcomed the news that most SMSFs have a corporate trustee and the structure is strongly favoured for new funds, contrary to previous data.

“This is a positive for the sector as the SMSFA has always advocated that corporate trust structures are best practice due to their advantages for SMSF administration, succession planning and aging trustees,” said Maroney.

He also said the ATO statistics disprove “recent alarmist headlines” accusing SMSFs of being responsible for a surge in Australian household debt.

“The figures show that total borrowings by SMSFs using limited recourse borrowing arrangements total about $23.5 billion or only 4% of all SMSF assets – hardly a number that would suggest SMSFs are on a borrowing binge.”

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