For many Australians with an SMSF, a large part of their fund will be made up of ASX listed shares and securities.
Pre-GFC this strategy worked a treat, and everyone thought they were an investment genius as they watched the value of their SMSF soar.
But in the aftermath, many SMSF holders are realising they’re perhaps not the stock-picking stars they thought they were…
Unfortunately the ATO (or anyone else for that matter) does not publish performance figures on the Australian SMSF sector, so it’s difficult to know how the average fund is going.
In the past there have been calls by government and other stakeholders to monitor and benchmark SMSF performance, however it appears that little has happened to make this a reality.
Without any official figures, we are left with anecdotal evidence from SMSF holders around the country. From the SMSF investors we have heard from, it certainly seems that the performance of self managed funds is not great at the moment.
With the share market making double-digit percentage losses this year and property also taking a hit, there is no doubt that the average SMSF will be taking a major hit, since this is where most SMSF monies will be invested.
Those who decided to leave their entire SMSF balance invested in cash and term deposits (and we know a few who have) will be very glad they did over the last few years, and especially over the last few months.
We all know that the average SMSF is going to be performing poorly given the economic and investment conditions of recent times, but the more important factor should be how the average SMSF is performing against the average industry or retail super fund.
Again, without proper performance reporting and benchmarking this is a very difficult task. Anecdotal evidence, at least from what we’ve seen, is that the average SMSF could well be under-performing its industry and retail super counterparts.
With the increase in popularity of SMSFs with ‘mum and dad’ investors, people who previously trusted their retirement savings to experienced fund managers are now performing the investment management themselves.
This is were things get dangerous. Of course some individuals can outperform the market, but for the average Joe who works outside of the funds management industry and gets their daily investment news from the paper or 6pm news, this could lead to some seriously poor investment decisions.
From industry insiders we’ve spoken to, this type of investor is behind the potential and probably under-performance of the SMSF sector, if indeed the sector is under-performing.
The sooner the ATO starts publishing performance figures and benchmarking for the SMSF sector, the better informed potential investors will be when making the decision whether or not to go down the SMSF path.