Saturday 5 August 2023

Our SMSF Performance vs Index (Industry Funds)

Inspired by Moomin's post of his SMSF monthly performance compared to comparable Uni/PS super funds (unisuper and PSS(AP)) where he and Moominmama might otherwise have their superannuation savings, which was in turn inspired by an AFR article by Tony Boyd comparing his SMSF's performance to a relevant index of industry super funds, I decided to have a look at how our SMSF has perforned over the past decade compared to the Index of industry super funds reported in the AFR article.

Our results have been quite comparable to industry fund returns overall, but with slightly better net returns in the worst years - especially in FY2022 when my/our decision to tactically adjust our asset allocation for several months (to a more conservative stance) when the Covid-19 pandemic was just starting to spread globally, helped mitigate the impact on our retirement savings.

Overall our SMSF has a slightly higher average net return for the past ten years compared to an index of industry super funds - 8.70% vs. 8.05%. The extra 0.65% doesn't seem like a huge amount, but compounded over many years such increments in annual performance will have a significant effect on the final outcome. I plotted a bar chart of our SMSF annual net return vs. the Index, with the baseline set at roughly the average inflation rate over the past decade (to show the relative inflation-adjusted average return of our SMSF vs the Index).

The net performance difference is likely due mostly to the average industry or MySuper fund charging around 1.08% admin/mgmnt fee (which is about half that charged by retail super funds), whereas the admin/mngnt/audit/ASIC fees on our SMSF was around $1,300 with the total SMSF fund balance (me, DW and DS1 accounts) of roughly 1,950,000 - or 0.06%. So the industry funds (runs by professional fund managers) might be producing about 0.35% better net returns (before fees) than our trustee-managed SMSF, but after adjusting for the admin/mngnt fee impact we end up around 0.65% ahead.

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1 comment:

mOOm said...

Cool. You did a lot better than the industry funds through the end of 2020 and then weaker...