The SMSF sector generated returns of more than 10 per cent during the 2023 financial year as funds with balances over $200,000 posted an average return on assets (ROA) of 7.5 per cent or higher, according to new figures released by the ATO.
The ROA numbers are included in the regulator’s “Self-managed superannuation funds: A statistical overview 2022-23”, which showed the total ROA for the SMSF sector was 10.1 per cent, an increase from from 0.9 per cent in 2021/22 and from 7.3 per cent in 2018/19.
At the same time, the median ROA was 6.7 per cent, up from -1.7 per cent in 2021/22 and 4.2 per cent in 2018/19.
The ATO stated the ROA figures are based on SMSF annual return form data, adding: “This is an indicator of performance across the entire SMSF sector and is not a direct comparison to APRA (Australian Prudential Regulation Authority) fund investment performance as the data inputs and methodology used are different.”
Breaking down the figures, it found SMSFs with balances of $200,000 or more had average ROAs above the median and larger funds had balances that were close to the overall sector return.
The statistics show funds with balances of less than $50,000 had a return of -8.9 per cent, while those with balances between $50,000 and $100,000 had a return of 0.2 per cent, but this figure increased as balances grew in size.
Funds with a balance between $100,000 and $200,000 had an average ROA of 3.5 per cent, while those with a balance of $200,000 to $500,000 had a return of 7.6 per cent, which was higher than the median ROA for the SMSF sector.
SMSFs with balances of $500,000 to $1 million returned 9 per cent, while those with balances over $1 million had an average ROA of 9.7 per cent.
The ATO noted the correlation between fund size and earnings, echoing the findings of an Adelaide University report from 2022 that found funds with balances above $200,000 were competitive with APRA-regulated funds when it came to performance and returns.
“The ROA is calculated by determining the net earnings and comparing this to average assets during the financial year to determine the percentage return on assets,” the ATO said.
“The estimated SMSF return on assets continues to show a direct relationship to SMSF size. Generally, the larger the SMSF asset holding, the higher the ROA.”
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