Benchmarking our SMSF performance

It is a bit pointless comparing how our SMSF has performed relative to others, as "it is what it is" to some extent. I can't jump into my time machine and change a decision made 15 years ago! But if our SMSF performance had been woeful, it might indicate that a change could improve future prospects. Fortunately our SMSF performance doesn't seem too bad -- at least in comparison to the median Growth Fund performance as reported by superguide.com.au

The data isn't quite comparable, as our SMSF annual performance (provided by eSuperFund) is for financial years, whereas the Median Growth Fund performance figures are for calendar years (they have financial year data behind a pay wall, but I am not going to pay $55 just to access the data).

The annual figures are shown below, along with historic 10-year trailing averages. The pattern shown from year-to-year is very similar, so comparing FY to CY doesn't appear to skew the comparison too badly.

The 10-yr averages show that our SMSF has outperformed the media Growth Fund by 1.06% - 2.39%. Which is line with the overall average historic annual performance since 2011 -- 9.52% vs. 7.85%. Part of this is likely due to our asset allocation being slightly more 'High Growth' than 'Growth', as shown by the higher stdev (8.27% for our SMSF vs. 6.43% for the median Growth Fund). But we are not taking on all that much extra risk (volatility) as the 2SD range is -7.03% to +26.06% from our SMSF (meaning we could expect the annual return to fall within this range 95% of the time), while the range for the median Growth Fund is quite similar: -5.01% to +20.71%. Personally I would be just as sanguine about a -7.03% negative return as a -5.01% negative return. Even the -3SD performance wouldn't be that much different: -15.3% for our SMSF vs.  -11.44% for the median Growth Fund.

Aside from slightly higher risk (and hence return), the other reason our SMSF performance is slightly better is likely due to the SMSF being quite low fees. The investment fee is only 0.29% (investing mostly in Vanguard Index Funds) and the overall admin fee for our SMSF works out to be only 0.063% based on our current balance.

Whatever the root cause for the performance differential (I won't claim it is due to my brilliant investment selection or occasional attempts at 'market timing'), over a 30-year timeframe the difference would be quite pronounced. A $100K lump sum invested with 9.52% average ROI would result in $1,528,598 vs. $100K invested with 7.85% median Growth Fund performance would result in only $965,171. That would mean the end result would be 58% more to fund retirement after 30 years!

All in all, our SMSF performance has been quite satisfactory. Which is better than the alternative ;)

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