The Australian Tax Office has issued a note with its latest superannuation figures which warns against comparing self-managed super funds with other funds.
“Care must be taken when using SMSF
performance figures, particularly when making comparisons,” ATO warned on its website. “While the methodology used to estimate SMSF
performance resembles APRA’s methodology, the data collected is not the same.”
The new ATO research shows the estimated return on assets (ROA) for SMSF
s in the year ended 30 June 2012 was positive (1.0%), although noticeably lower than the 7.7% ROA in the two years ended 30 June 2010 and 30 June 2011.
Quarterly fund level reports released last week by the Australian Prudential Regulation Authority showed over the past 12 months industry funds grew by 21.5%, retail funds grew by 13.9% and SMSF
s grew by 15.5%.
Professionals’ Association of Australia (SPAA) agrees with ATO, saying it is “futile” to compare figures on investment performance and fees within the different super groups.
“The ATO specifically states that comparing the investment performance between SMSF
s and other types of superannuation funds is fraught with danger. While methodologies may be comparable, the data collected from the different types of funds is not the same,” SPAA Technical and Professional Standards director Graeme Colley said.
“It’s similar with fees. Comparing the operating expenses of SMSF
s compared with other types of superannuation funds is difficult.”
Colley says the rates of return of SMSF
s show a direct relationship with the relative size of the SMSF
– the larger the SMSF
, the greater the return on assets.
In the 12 months to 30 June 2012, the ATO figures showed the expense ratios of SMSF
s are about 0.56%, falling from 0.69% to 0.56% over the five years to 2012.
“This decrease reflects the increase in the asset sizes of SMSF
s over the period as well as increased competition in the market for audit, accounting and administration services for SMSF
s. Average operating expenses have increased over the same period and are estimated to be $5600,” Colley says.
“Due to the fixed costs of operating a fund, SMSF
s with lower balances have higher average expense ratios – 9.5% with SMSF
s with a balance of $50,000 to less than 1% for SMSF
s with assets of more than $500,000.”