SMSFs Outperform Retail and Industry Funds: Insights from Recent Research
Recent research from the University of Adelaide’s International Centre for Financial Services (ICFS) has revealed that Self Managed Super Funds (SMSFs) have outperformed retail and industry funds over the past five years. Between 1 July 2018, and 30 June 2023, SMSFs achieved an annualised return of 6.5%, surpassing the 5.3% return of retail and industry funds during the same period.
In the 2022-23 financial year, the median return for SMSFs was 6.6%, while retail and industry funds led with an 8.4% return. This indicates that while SMSFs may lag in certain years, their long-term performance remains robust.
Several factors contributed to the superior performance of SMSFs:
1. Investment Flexibility: SMSFs offer trustees the autonomy to tailor investment strategies to their risk tolerance and financial goals, enabling more responsive and potentially higher-return investments.
2. Cost Efficiency: For funds with balances exceeding $200,000, SMSFs can be more cost-effective compared to retail and industry funds, as they may incur lower fees relative to their asset size.
3. Advice: Research indicates that SMSFs in receipt of advice outperformed non-advised SMSFs by 1.2% in 2022-23, pointing to the value of advice.
4. Short term underperformance: The outperformance by retail and industry funds over SMSFs in 2022-23 may be explained by the “home bias” of SMSF investments. Previous research by the ICFS indicates that only about 2% of SMSFs invest internationally, whilst a much larger percentage of retail and industry funds invest internationally, typically with larger weights than SMSFs. SMSFs can therefore miss out on significant growth in overseas markets, when that occurs. For example, in 2022-23, the US S&P500 index increased by 17.7%, whilst the S&P ASX200 index increased by 9.7% in the same period.
While SMSFs offer potential advantages, they also require a significant commitment of time and expertise. Trustees must stay informed about market trends, regulatory changes, and investment opportunities to effectively manage their funds.
The University of Adelaide’s research underscores the strong performance of SMSFs over the past five years, highlighting their resilience
and potential for higher returns compared to retail and industry funds. Prospective trustees should weigh the benefits against the
responsibilities to determine if an SMSF aligns with their retirement objectives.
If you would like to learn more about setting up your own self managed superannuation fund, we'd love to help you! Book a 1-hour free
initial consultation (new clients only) with our SMSF Specialist team where they'll answer all of your SMSF questions and discuss your
next steps.
Sources:
[1] Mihaylov, G, Indriawan, I and Zurbruegg, R (2025) Self-managed super fund performance 2022-2023
https://www.smsfassociation.com/smsf-performance
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