The 12-month return for the entire self-managed superannuation (SMSF) sector, as represented by the SG360 SMSF Reference Index, to the end of February 2018 was around 5.5 per cent before fees and tax, the latest results from SuperGuard 360 showed.
This compares unfavourably with SG360 Default Index, which returned 9.6 per cent. The default index is based on the returns from default MySuper products.
SuperGuard 360 attributed the lower performance by SMSFs to lower asset class weightings to growth assets, especially international equities.
Underperformance of international equities versus Australian equities in February helped to close the gap, but the 12-month return of international equities was still around 6 percentage points higher than Australian equities, it said.
Three-quarters of all SMSFs have assets of less than $1 million, and according to figures from the Australian Taxation Office (ATO), these have much higher weightings to cash and lower weightings to equities than the larger, higher-performing SMSFs that hold the majority of SMSF assets.
This means the majority of SMSF members are in funds that are likely to achieve lower than ideal investment outcomes, SuperGuard 360 said.
So, 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, it said.