$200,000 appears to be a key balance when it comes to getting the most out of a self-managed superannuation fund (SMSF) with new research confirming that large SMSFs perform better than those with lower account balances.
The joint research from SuperConcepts and the University of Adelaide's International Centre for Financial Services found larger SMSFs operated more effectively because they are more diversified and had longer experience in the sector.
Commenting on the research report — When size matters: A closer look at SMSF performance — SuperConcepts general manager of technical services and education, Peter Burgess, said the research revealed when a fund reaches a balance of $200,000, the benefits of investment diversification start to kick in.
"Our research shows size matters with large SMSFs performing better than small ones," he said.
"Performance, diversification and expense ratios continue to improve as a fund increases in size."
University of Adelaide professor, Ralf-Yves Zurbrugg said there is a "double whammy" for those SMSFs with balances under $200,000.
"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," he said.
The research suggested that large funds were more efficient in their operation, in terms of the direct expenses involved in managing an SMSF and that when a fund reached $550,000 under management, its expense ratio dips below two per cent and diversification and performance is comparable to the largest funds.