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This commentary is written by Vanguard Principal, Corporate Affairs & Market Development Robin Bowerman. The title is SMSFs: Costs versus performance

It was first published on Tuesday 24 April 2012

And is read by Michael Mullins

Please remember that advice in this podcast represents a general view. It is recommended that you seek specific financial advice, before making investment decisions.

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.)

And that concludes the column

SMSFs: Costs versus performance

from Robin Bowerman,  Principal, Corporate Affairs & Market Development at index fund manager Vanguard Investments Australia

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Please remember that advice in this podcast represents a general view. It is recommended that you seek specific financial advice, before making investment decisions.