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SMSF: Costs versus performance

 

One of the most interesting findings in a new tax office report - Self-Managed Superannuation Funds - A Statistical Overview - is that ..






.. the bigger the balance, the better the performance during the financial years examined.

This finding is perhaps not surprising given that larger SMSFs typically have markedly lower
costs - as a proportion of their assets - than their smaller counterparts. And
larger SMSFs can afford to spend more on professional financial planning and
tax advice.


Smart Investing initially looked at this ATO report last week (Inside story on SMSFs and SMSFs winning on cost control ).


Based on SMSF tax and regulatory returns, the ATO estimates that in 2009-10, the average rate
of return for SMSFs according to asset size was:


  • Up to $50,000 in assets: -8.64 per cent.
  • $50,000-$100,000 in assets: -1.48 per cent.
  • $100,000-$200,000 in assets: 2.46 per cent.
  • $200,000-$500,000 in assets: 5.23 per cent.
  • $500,000-$1 million in assets: 6.87 per cent.
  • $1 million-$2 million in assets: 7.71 per cent.
  • Above $2 million: 8.90 per cent in assets.

These returns should reinforce to anyone considering whether to setup an SMSF that asset size
and costs really influence the feasibility of having your own fund. (The cost
issue was discussed by Smart Investing in last week's blogs mentioned above.)


Read this tax office report on SMSFs.


 


By Robin Bowerman
Smart Investing
Principal & Head of Retail, Vanguard Investments Australia


24th April 2012





18th-June-2012

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