HIGHLIGHTS UP TO FEBRUARY 2014:
- SMSFs outperform large funds 4 years out of 6 20-year high!….Read More
- Super funds gain 17.5% for 2013 calendar year….<Read More>
- Top 10 performing super funds for 2013 calendar year, and for past 10 years….<Read More>
- Exposing the performance history of Australia’s largest 200 super funds….<Read More>
- APRA league tables: Top 25 performing super funds over 10 years, and 5 years ….<Read More>
- Working is the ‘new’ retirement for baby boomers….<Read More>
- At what age should I retire?….<Read More>
- 20 largest super funds ….<Read More>
- Where are the women, consumers and property expert?….<Read More>
- Do you fit the profile of a typical SMSF trustee?….<Read More>
- Only 24 (9 + 6 + 9) independent financial advisers in Australia ….<Read More>
- SMSFs surge towards 520,000 and $520B in assets….<Read More>
- Naming the investment winners for the 2013 calendar year….<Read More>
- Three most popular asset classes, and the rest….<Read More>
- the inside story on DIY super funds ….<Read More>
-
Dear financial advisers: choose to be magnificent, not mediocre….<Read More>
SMSFs outperform large funds 4 years out of 6
A common argument put forward against individuals starting a self-managed super fund is that budding SMSF trustees could lose their hard-earned super savings through inexperienced investing, and bad investment
decisions. Until relatively recently, there wasn’t much evidence confirming or denying this ‘world view’ mainly proffered by the large super fund sector.
A common argument put forward against individuals starting a self-managed super fund is that budding SMSF trusteee could lose their hard-earned super savings through inexperienced investing, and bad investment decisions. Until relatively recently,
there wasn’t much evidence confirming or denying this ‘world view’ mainly proffered by the large super fund sector.
The ATO now publishes SMSF performance data and the real story is quite startling. SMSFs have outperformed the large fund sector (corporate, industry and retail funds) in four years out of six.
SMSFs outperformed large super funds for the four years ended 30 June 2007, 30 June 2008, 30 June 2009 and 30 June 2012, but large super funds performed better for the years ended 30 June 2010 and 30 June 2011.
Investment Performance
| Financial Year | SMSFs (%) | Large Funds (%) | Outperformer |
| 2008 | 16.7% | 14.5% | SMSF |
| 2009 | -5.9% | -8.1% | SMSF |
| 2010 | -6.7% | -11.5% | SMSF |
| 2011 | 7.7% | 8.9% | Large Funds |
| 2012 | 7.7% | 7.8% | Large Funds |
| 2013 | 1.0% | 0.5% | SMSF |
Note: While the methodology used to estimate SMSF performance resembles APRA’s, the data collected is not the same. The data in the table above is sourced from four ATO reports: SMSFs – A statistical overview 2011-2012, SMSFs – A statistical overview 2010-2011, SMSFs-A statistical overview 2009-10, and SMSFs – A statistical overview 2008-09.
20-year high! Super funds gain 17.5% for 2013 Calender Year
The median superannuation growth fund gained 17.5% in value for the 12 months to December 2013, with international shares and Australian shares being the stand-out asset classes, according to rating company Chant West. The median return of 17.5% is the best performance for the past 20 calendar years, and the second best since the introduction of Superannuation Guarantee in 1992. Performance tables are set out later in this article.
Warren Chant,
director of Chant West says: “We’ve now had nine positive calendar year returns in the past eleven. Of course, one of those two negative years was 2008, when in the depths of the GFC [global financial crisis], the median growth fund sustained a 21.5% loss.
“However, funds have bounced back strongly from that setback, and now stand about 21% above their pre-GFC high achieved in October 2007. They’ve gained an impressive 64% since the GFC low-point, which came at the end of February 2009.”
Chant observes that since the great majority of Australian workers are in their employer’s default growth fund, if fund members “sat tight while the GFC came and went they will have emerged with their savings relatively unscathed. And of course, the contributions going into their accounts during those GFC-affected years have bought assets at depressed prices.”
Chant believes one of the benefits of the compulsory super contributions (SG) system, where super contributions are made regularly, regardless of the state of investment markets. He says: “Sometimes you’re buying assets at bargain prices, even if you don’t appreciate it at the time.”
“While growth funds are well diversified across different sectors, listed shares and property are still the biggest components of their investment mix. On average, they have about 57% of their investments in those sectors, so share market performance is the main influence on their overall performance,” says Chant.
According to Chant West, share markets performed well during 2013, with international shares outperforming Australian shares. The fall in the Australian dollar meant that unhedged international shares outperformed other asset classes.
What is hedging? Briefly, when a super fund hedges your international investments against movements in the Australian dollar or foreign currency, your investment return is solely based on the merits of the investment rather than the strength or otherwise of the Australian dollar. If your super fund chooses not to hedge your international investments, then the return you may receive on this part of your portfolio may have very little to do with the merits of your investment, but may have more to do with what is happening to the Australian dollar. When unhedged international shares deliver spectacular returns, as they have done for the 2013 calendar year, I receive a lot of flack for pushing that default investment options should always hedge foreign currency exposure for international shares. My main point is that currency movement is not an asset class, and creates higher volatility in investment returns, that have no place in an investment option that a fund member has not actively chosen. I explain the significance of hedging in more detail in the SuperGuide article Ban unhedged international shares in default investment options.
Top 10 performing super funds for 2013 calendar year, and for past 10 years
The Top 10 performing super funds for the 2013 calendar year, and for 10 years are listed in the tables in this article. Read more
Exposing the performance history of Australia’s largest 200 super funds
The Australian Prudential Regulation Authority (APRA) has released its latest report on the performance of Australia’s largest 200 superannuation funds for the years 2004 to 2013. The report also provides average returns for the 200 super funds over a 5-year period and 10-year period to June 2013. Read more
APRA league tables: Top 25 performing super funds over 10 years, and 5 years
You can discover the 25 top-performing super funds over 10 years, and over 5 years to 30 June 2013. By referring to the APRA league tables, you can also discover where your super fund ranked against the top performers, if your super fund didn’t make the top 25 or so top-performers. Read more
Working is the ‘new’ retirement for baby boomers
Just under a quarter of the 5.5 million baby boomers in Australia believe that they will need to work into their eighties because they don’t have enough money to finance a work-free retirement, according to research conducted by Suncorp Superannuation. Read more
Super challenge: At what age should I retire?
Selecting a retirement age, even if you plan to continue some form of work during retirement, can be a difficult decision. In some cases, individuals don’t get a choice about when to retire due to health issues, or due to redundancy in later years and then difficulty finding another job. Read more
Kingpins of super: 20 largest super funds
The 20 largest super funds in Australia control more than half (58%) of all super money held by the 320 or so larger super funds, and control nearly 40% (39%) of all super money held in Australia. Noting that SMSFs control more than 30% (32%) of super fund assets, the 20 large super funds in this article have incredible influence politically, and within financial circles. Read more
Financial System Inquiry: Where are the women, consumers and property expert?
On 20 December 2013, the federal government released the final Terms of Reference for the promised Financial System Inquiry (FSI), after a very speedy industry ‘consultation’ process that commenced on 21 November 2013. The federal government has also announced the appointment of 4 members to serve on the FSI panel. The government is now accepting submissions and has launched a special FSI website. Read more
Do you fit the profile of a typical SMSF trustee?
The latest ATO statistics on SMSFs (representing SMSF activity up to the end of September 2013) highlight some interesting observations that can be made about the current batch of SMSF trustees. Read more
Financial advice: Only 24 (9 + 6 + 9) independent financial advisers in Australia
Before you ask the obvious question, let me say, we have asked the same question: How do we know that the 24 advisers in the SuperGuide list are the only independent advisers in Australia? Read more
SMSFs surge towards 520,000 and $520B in assets
More than half a million self-managed super funds are now in operation, according to the latest statistics released by the Australian Taxation Office. The exact number of SMSFs (as at September 2013) is 516,925, and thousands of new SMSFs are being established every quarter. Read more
Asset classes: Naming the investment winners for the 2013 calendar year
Australian and international shares delivered the biggest returns for the 2013 calendar year (1 January 2013 to 31 December 2013), according to Warren Chant of rating company, Chant West. Read more
SMSF investment: Three most popular asset classes, and the rest
Each quarter the ATO releases self-managed super fund statistics derived from annual return data. Some of the more interesting data outlines the investments that SMSF trustees choose, and how much SMSF money is invested in the different asset types. Read more
SMSF confidential: the inside story on DIY super funds
The Australian Taxation Office has delivered on its promise to regularly share its market intelligence about self-managed super funds (SMSFs). The ATO has now provided the answers to some of superannuation’s burning questions, such as, ‘Are SMSFs really cheaper than larger super funds?’ and ‘Do SMSFs perform better?’ Read more
Dear financial advisers: choose to be magnificent, not mediocre
I believe an independent, qualified financial adviser, focused on the best interests of the client can be a valuable partner for any individual’s or family’s wealth creation plans, along with excellent tax advice from an accountant. I assumed that the majority of the financial advising industry shared a similar view to me (apart from the ‘independent’ aspect), or at least we were all looking in the same direction since the introduction of the new financial advice laws. Read more
Note: All Articles Supplied by SuperGuide
Leave a Reply
You must be logged in to post a comment.