Executive summary

The SMSF sector remained the largest sector of the Australian super industry, with 99% of the number of funds and 31% of the $1.6 trillion total super assets as at 30 June 2013.1

At 30 June 2013, there were 509,000 SMSFs holding $506 billion in assets.2 There were also approximately 964,000 members in the SMSF sector, almost 8% of roughly 11.6 million members in Australian super funds. 3

The data confirms the SMSF sector continued to respond to changing economic circumstances. This was evident from changes in the level of growth in SMSFs, contributions made to the sector and shifts in asset types held. There were positive shifts in SMSF numbers and the level of contributions, in line with improved confidence in economic conditions. SMSFs are both flexible and resilient in their ability to concentrate or diversify asset portfolios.

SMSF members tended to be older than members of APRA funds and had both higher average balances and higher average taxable incomes. The trend continued for members of new SMSFs to be from younger age groups than those of the total SMSF member population.

The majority of SMSFs are solely in the accumulation phase (65%); however, of SMSFs that pay a pension for the first time there continued to be an increase in the proportion of these funds that were in their first year of operation.

SMSFs directly invested 80% of their assets, mainly in cash and term deposits and Australian-listed shares (a total of 61%). In 2011–12, funds across most asset ranges tended to also favour cash and term deposits, while those with more than $5 million in assets held a higher proportion in listed shares. Over the five years to 2011–12, there was an increase to 14% in the proportion of SMSFs holding all of their investments in one asset class.

At 30 June 2012, SMSFs held $6.3 billion in borrowings and $3.5 billion in other liabilities. The level of borrowings is equivalent to 1.4% of total SMSF assets. The proportion of SMSFs with borrowings increased progressively to 3.7% in 2012. SMSFs with borrowings were more likely to hold non-residential and residential real property, assets held under limited recourse borrowing arrangements and other assets, compared to the total SMSF population.

In 2011–12 the estimates of the return on assets for the SMSF sector was positive (1.0%), though noticeably lower than the positive returns in 2009–10 and 2010–11. The trend in estimated returns is consistent with that for APRA funds of more than four members.

The estimated average operating expense ratio of SMSFs fell over the four years to 2010–11 and remained stable in 2011–12. Further the ratio declined in proportion to the increase in the fund’s asset size. In contrast the estimated SMSF average operating expenses in dollar terms increased from 2010 to 2012, particularly for SMSFs solely in the accumulation phase.

    Last modified: 16 Dec 2013QC 37999