POWERED BY MOMENTUM MEDIA
Size matters for SMSFs
$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.
Recommended for you
A recent NSW Supreme Court decision is an important reminder that while super funds may be subject to restrictive superannuation and tax laws, in essence they are still a trust and subject to equitable and common law claims, says a legal expert.
New research from the University of Adelaide has found SMSFs outperformed APRA funds by more than 4 per cent in 2021–22.
The SMSF Association has made a number of policy recommendations for the superannuation sector in its pre-budget submission to the government.
ASIC has sentenced former director Mudasir Mohammed Naseeruddin over four years imprisonment for ‘egregious conduct’ and dishonestly obtaining client funds from six investors’ SMSF accounts.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI First Close USD
73.88 3 y p.a(%)
2
Hills International
63.66 3 y p.a(%)
3
Acadian Global Equity Long Short Class A
36.33 3 y p.a(%)
4
CFS FC Acadian Global Equity Long Short
35.96 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
32.23 3 y p.a(%)
So you can't get diversification under $200,000? Does this mean that everyone with under $200k sitting in an industry or retail super fund is not seeing the benefits of diversification? Your premise suggests that as soon as I hit the $200k mark, all of a sudden I'll have a 'eureka' type revelation and realise I need to diversify.. With as little as $50k I can diversify by purchasing $20k in managed funds, $10k bullion, $10k direct shares, and even throw in a $10k term deposit.
Even when I have $150k are you telling me that the benefits of diversification still won't show?
This $200k mark that is thrown around certainly used to be the case when you were charged upwards of $4k in administration. But administering a self managed super is a fraction of the cost it used to be. A simple Google search will back this up.
Obviously a SMSF is not cost effective for extremely low balances but $200k? Really?
Managing your own super is about control and flexibility, not just how much super you have. This really needs to be part of the conversation. This arbitrary number $200k is just lazy and outdated.
Add new comment