Absolute Return

Advised SMSFs outperform self-directed

Advised SMSFs outstripped self-directed SMSFs over the 12 months to June 2016, according to the latest industry research.

A report conducted by SMSF Benchmarks revealed larger funds outperformed small funds – an SMSF with less than $200,000 – over the period, and advised SMSFs outperformed self-directed SMSFs across all fund sizes, that is, over $200,000.

It also found the median fund size for those SMSFs that were advised was $1.1 million, whereas self-directed SMSFs had a median fund size of $850,000.

“ATO statistical reports indicate that large SMSFs tend to outperform small SMSFs – we wanted to look for any evidence about whether one reason for this outperformance was due to the value of advice around investment decisions, asset allocation and strategy,” SMSF Benchmarks chief executive Nick Shugg said.

“To test that, other potential reasons for this outperformance, such as fees and taxes, must be removed from the comparisons.

“Fixed fees are proportionately lower in large funds, as are taxes, as many are in pension phase, and they also have greater ability to invest directly in property.”

In order to eliminate these factors, SMSF Benchmarks compared total fund returns for over 300 funds using a time-weighted return method, before fees and taxes, and then excluded funds that had invested directly in property.

“As we grow, we will be able to explore further aspects of SMSF performance benchmarking and provide powerful new information to the SMSF community,” Shugg said.

SMSF Benchmarks is an independent, online benchmarking firm and is based on crowdsourced information.


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