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Why MySuper funds are outshining SMSFs

As SMSFs tally boards record another month of underperformance, this superannuation consultant is urging investors to think bigger with their decisions.

According to the SuperGuard 360 SMSF performance indices, in the 12 months to the end of February 2018, SMSFs posted average returns of 8.5 per cent before fees and tax.

That’s compared with the 9.6 per cent returned by the SG360 Default index which measures returns on default MySuper products.

“Lower performance by SMSFs is the result of lower asset class weightings to growth assets especially international equities,” SuperGuard said.

“Underperformance of international equities versus Australian equities in February helped to close the gap, but the 12-month return of international equities was around six percentage points higher than Australian equities.”

Continuing, SuperGuard noted that around 75 per cent of SMSFs possess assets less than $1 million and are much heavier in cash and lighter in equities than their higher performing and larger counterparts.

“This means that the majority of SMSF members are in funds likely to achieve lower than ideal investment outcomes.

“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.”

The SG360 Default Index outperformed the SG360 Reference Index over three, five and 10 year measurements.

Additionally, a hypothetical $100,000 invested 10 years ago would now be worth $160,796 with the SG360 Default Index – an increase in value of 61 per cent.

Those who invested the hypothetical $100,000 with the SG360 SMSF Reference Index would have seen an increase of 55 per cent to $154,928.

Why MySuper funds are outshining SMSFs
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