SMSF average and median assets
In 2016, the average assets of SMSFs were just over $1.1 million, representing a growth of 25% over five years and 3% from 2015.
The median SMSF asset size was $642,000, an increase of 30% over the period and 5% from 2015. The growth in average and median SMSF assets was consistent with that of SMSF member balances (see Graph 9 and appendix 1, table 12).
The difference between the average and median asset figures is due to the high proportion of SMSFs with more than $1 million in assets. These have increased from 27% in 2012 to 33% in 2016 (see appendix 1, table 14).
For SMSFs established in 2016, the average fund assets were $390,000, an increase of 20% from average assets of $325,000 for those established in 2012. Similarly, the median assets of SMSFs established in 2016 were $245,000, an increase of 27% over the period (see Graph 10 appendix 1, table 13).
SMSF assets by age of fund
For funds established in the 10 years to 30 June 2016, the median asset value in the year of establishment was on average $224,000. Generally the median asset values of these funds increased by 50% in their second year of operation.
For more recently established funds, the time taken to double their starting asset balance has decreased to approximately four years, compared to five years for funds established in 2008 and 2009.
SMSF assets by payment phase
For the year ended 30 June 2016, 69% of total SMSF assets were reported by funds in pension phase.28 The assets held by SMSFs in the pension phase increased by 3% over the five years to 2016.
Over this period, there were shifts in the distribution of SMSFs by payment phase across asset ranges. There was a decrease in the proportion of funds in accumulation phase with assets of $200,000 or less (10%). The largest increases were in funds with assets of between $500,001 and $2 million (7%).
There were also shifts for SMSFs in pension phase, with a decrease in the proportion of funds in pension phase with assets of more than $50,000 to $1 million (7%), and an increase in funds with assets of more than $1 million to $5 million (5%).
On average, over the five-year period, 51% of SMSFs in accumulation phase held assets of between $200,001 and $1 million, and 54% of SMSFs in pension phase held assets between $500,001 and $2 million.
In 2016, while 28% of SMSFs in accumulation phase held assets of $200,000 or less, only 6% of SMSFs in pension phase were within these asset ranges. Conversely, 24% of SMSFs in pension phase held assets of greater than $2 million, compared to only 6% of SMSFs in accumulation phase.
There was a similar proportion of SMSFs with assets of between $200,001 and $2 million in accumulation and pension payment phase, of 66% and 70% respectively.
SMSF assets by range
At 30 June 2016, 49% of SMSFs had assets of between $200,001 and $1 million, accounting for 23% of all SMSF assets (see appendix 1, table 14). Over the five years to 30 June 2016, the majority of SMSF assets were held by funds with assets between $1 million and $5 million, representing 54% of total SMSF assets.29 The proportion of SMSFs in these asset ranges gradually increased from 25% in 2012 to 30% in 2016. In 2016, only 2.8% of funds held assets of more than $5 million, representing a 1% increase of funds over the period.
Graph 12 shows a continued shift of SMSFs into higher asset ranges. For the five-year period, the proportion of SMSFs holding more than $500,000 in assets increased.
Graph 12: SMSF asset sizes 2012–16
Graph 13 shows SMSFs established in the five years to 2016 have moved to establish with higher opening asset balances. Of the SMSFs established in 2012, 49% held more than $200,000 in assets, increasing to 58% for those established in 2016.
There was a decrease of 9% in the proportion of SMSFs established with less than or equal to $100,000 in assets, while the proportion of funds established with assets of more than $200,000 to $2 million increased by 9%.
Graph 13: SMSF asset size in establishment year 2012–16
For information on asset sizes in establishment year, also see supplementary table 14.1, XLXS file.
SMSF asset allocation
At 30 June 2016, most SMSF asset holdings continue to be in Australian listed shares and cash and term deposits (see appendix 1, table 15).
Graph 14 shows 54% of all SMSF assets were directly invested in these two asset classes.
Graph 14: 2016 SMSF asset allocations
Certain asset types have been amalgamated – see appendix 1 – table 15 for the complete list of assets.
Graph 15 shows annual shifts of SMSF asset holdings by asset type as a proportion of total assets.
For the fourth consecutive year, there were decreases in the proportion of total assets held in cash and term deposits and non-residential real property. There were also decreases in the proportion of assets held under listed shares in 2015 and 2016 following two years of growth.
From 2013, changes were made to ATO data collection for assets held under limited recourse borrowing arrangements (LRBA) and this has contributed to annual increase of LRBA investments.
The value of estimated assets held under LRBAs increased to $25.4 billion or 4% of total SMSF assets in 2016, up from $2.5 billion or 0.6% of total assets in 2012. Over the five years to 2016, there were annual increases of 1% or less in proportion of total assets attributed to LRBA assets.
Graph 15: Change in percentage of total SMSF assets by asset type, 2012–16
Graph 16 shows the annual shifts in the proportion of SMSFs holding the same types of assets as in graph 14.
A comparison of graphs 15 and 16 shows that, in 2016, assets in cash and term deposits as a proportion of total SMSF assets decreased, while the proportion of SMSFs holding these assets remained stable.
For listed shares, there was a 1% increase in the proportion of SMSFs holding the assets, while the proportion of total SMSF assets held decreased by less than 1%.
In 2016, only non-residential real property saw a decrease in the proportion of funds holding these assets (1%). The remaining asset types remained stable or saw increases, in particular listed and unlisted trusts (both 2%) and all other assets (3%).
In 2016, 7% of SMSFs reported assets held under LRBAs, which was a slight increase from the prior year (6%). The majority of these funds held LRBA investments in Australian residential real property and non-residential property, representing 4% and 2% of total SMSFs. In terms of value, 93% or $23.7 billion of all LRBA investments were attributed to real property assets combined (see appendix 1, table 15).
Graph 16: Change in percentage of SMSF population holding assets by asset type 2012–16
At 30 June 2016, 80% of SMSF assets were reported as directly invested by SMSFs, with 20% invested in managed investments. This is consistent with the amount invested in managed investments each year for the five years up to 2016 (see appendix 1, table 15).
In 2016, SMSFs across asset ranges up to $500,000 tended to favour cash and term deposits, holding a minimum of 32% of total assets in this type of investment. SMSFs with greater than $500,000 to $1 million tended to favour both cash and term deposits and listed shares, with these investments each attributing to 27% of their total assets. SMSFs with more than $1 million in assets held a higher proportion in listed shares (30%).
Generally as fund size increased, the proportion of assets held in cash and term deposits decreased significantly while the proportion of assets held in trusts and other managed investments increased. This is consistent with 2015.30
Larger funds tend to have a greater proportion of their assets in unlisted trusts and non-residential real property than smaller funds. However, the proportion of assets in residential real property held by SMSFs across asset ranges is fairly consistent.
In 2016, SMSFs in the pension phase had very similar assets to SMSFs in the accumulation phase (see appendix 1, table 16). The only noticeable difference was SMSFs in the pension phase tended to slightly favour listed shares, while accumulation phase funds held a greater proportion in residential, non-residential real properties and LRBAs.
SMSF borrowings and other liabilities
At 30 June 2016, SMSFs had liabilities to non-members of $24.6 billion, equivalent to 4% of total SMSF assets. This consists of $19.5 billion in borrowings and $5.2 billion in other liabilities, 3% and 1% of total assets respectively (see appendix 1, table 15).
SMSFs are prohibited from borrowing money, except in certain limited circumstances permitted under the SIS Act. These circumstances include LRBAs that meet certain conditions. Other liabilities are obligations the SMSF has to non-members that do not fall under borrowings.
Over the five years to 2016, SMSFs with borrowings increased progressively from 4% of SMSFs in 2012 to 9% in 2016. The average amount borrowed also increased by 4% from $356,000 in 2012 to $372,000 in 2016.31
On average, 86% of SMSFs with borrowings were in accumulation phase, while 14% were in pension phase. Over the period there was a 4% shift, increasing the proportion of funds with borrowings in accumulation phase.
The majority of SMSFs had other liabilities, an average of 62% over the period. The average amount for other liabilities increased from $12,500 in 2012 to $15,600 in 2016.
SMSF asset concentration
For the year ended 30 June 2016, 11% of SMSFs held all their investments in one asset class, representing 5% of all SMSF assets. The proportion of SMSFs is down from the five-year average of 12% but remains consistent with the proportion of all SMSF assets (5%) (see appendix 1, table 17).
Generally, SMSFs with smaller asset holdings were more likely to have high asset concentration, with diversification of assets increasing as fund assets rise.
SMSFs with assets between $1 and $50,000 were more likely to hold only one class of asset (42%), consistent with the fact that SMSFs in this range held 55% of their assets in cash and term deposits (see appendix 1, table 18).32
SMSFs with the larger assets have a greater diversity of investments, with less than 8% of funds within each asset range of more than $500,000 holding just one asset class (see appendix 1, table 18).
In turn, over the five years to 2016, SMSFs with assets of $200,000 or less held a higher concentration of assets.
In 2016, approximately 51% of SMSFs held 50% or more of their assets in cash and term deposits or listed shares (see appendix 1, table 19). Cash and term deposits were the sole asset held by 9% of SMSFs. While 6% of SMSFs invested 90% or more in listed shares, only 0.2% solely held listed shares.
SMSFs in the accumulation phase were more likely to hold one class of asset than those in the pension phase (see appendix 1, table 20). This suggests SMSFs in the pension phase tend to hold a more diversified investment portfolio in supporting an income stream.
Care must be taken when using SMSF performance figures, particularly when making comparisons. While the methodology used to estimate SMSF performance resembles APRA’s methodology, the data collected is not the same.
The estimated return on assets (ROA) for SMSFs in the year ended 30 June 2016 was positive (2.9%). Although the investment performance for the SMSF sector was below the returns experienced in 2015, it continued the trend of positive returns over the five-year period (0.4%, 10.2%, 9.7% and 6.0% for 2012 to 2015 respectively).
Graph 17 shows comparisons with rates of return (ROR) reported for APRA funds of more than four members. The performance for APRA funds and SMSFs follow the same trend in estimated returns for the five years, with the same return reported for 2016 (APRA reported 0.4%, 13.9%, 11.7%, 8.9% and 2.9% respectively).33
Graph 17: Average returns for SMSFs and APRA funds 2012–16
Graph 18 shows the proportion of SMSFs by their estimated ROA ratio. There was a 15% decrease in the proportion of funds experiencing positive ROA of greater than 5% to 10%, from 24% of funds in 2015 to 9% in 2016.
In turn, the proportion of funds with an ROA of -5% to 0% increased from 15% of funds in 2015 to 29% in 2016 (13%), which contributes to the decrease in the overall rate of return experienced by SMSFs in 2016.
Over the five years to 2016, the majority of SMSFs experienced positive ROA (52% of SMSFs in 2016), with the exception of 2012 when most experienced negative ROA (53%).
Graph 18: SMSF return on assets 2012–16
The estimated SMSF ROA continues to show a direct relationship with SMSF size. Generally, the larger the SMSF asset holding the more improved the ROA (see appendix 1, table 21).
Graph 19 shows the estimated average ROA by SMSF size for the five years to 30 June 2016. On average, SMSFs with more than $200,000 in assets had a positive ROA in 2016. By comparison, SMSFs with assets of more than $100,000 to $200,000 had a negative average ROA of -3.3%, decreasing from -1.0% in 2015.
Graph 19: SMSF return on assets by fund size 2012–2016
As with estimated SMSF investment performance data, care must be taken when using expense ratio figures because comparisons may not be meaningful. While the methodology used to estimate SMSF expense ratios is as close as possible to APRA’s method, the data collected is not the same (see appendix 2 – data issues).
From 2013 onwards, new labels were added to the SMSF annual return to collect information on non-deductible expenses incurred by SMSFs, particularly for those in pension phase. These labels have been incorporated in our calculation of expense ratios figures for 2013 and later years. The increases in SMSF expense ratios from 2012 to 2013 are largely due to these reporting changes.
From the 2015 SMSF Overview we report on 'total expenses' incurred by SMSFs with a further breakdown of expenses into 'investment expenses' and 'administration and operating expenses'. For information on the expense types included in each category (see appendix 3 – glossary).
The estimated average total expense ratio (TE) of SMSFs in the year ended 30 June 2016 was 1.21%, which is consistent with the ratios from 2013 to 2015. By comparison, the average TE ratio in 2012 was 0.67%, when funds only reported deductible expenses. In value terms, the average SMSF total expense amount grew by 67% from $6,100 in 2012 to $10,200 in 2013, and subsequently by 10% each year to $13,700 in 2016.34
In 2016, SMSFs solely in the accumulation phase had average total expenses of $13,400, while those in pension phase averaged $14,100. A comparison by the types of expenses, showed that SMSFs in pension phase had higher average expenses across most expense types, with the exception of ‘forestry and managed investment scheme expenses’ and ‘other amounts’. There was little difference in average expenses for 'SMSF auditor fees' between the two fund phases.35
Over the five years to 2016, there was an increase in expense ratios by type of expenses incurred, to 0.65% for 'investments expenses' and 0.56% for 'administration and operating expenses' in 2016 (see appendix 1, table 22).
The average administration and operating expenses value more than doubled over the five years, from $3,000 in 2012 to $6,400 in 2016. By comparison, the average investment expenses value grew steadily over the five years from $8,000 in 2012 to $12,700 in 2016.
The majority of SMSFs had an estimated TE ratio of 1.5% or less (57% of SMSFs in 2016). Similarly most funds had estimated 'administration and operating expense' and 'investment expense' ratios of 1.5% or less, 74% and 66% of SMSFs respectively (see appendix 1, table 23 and supplementary table 23 in XLXS file).
Graph 20 shows the 2016 estimated expense ratios by fund size. The ratios generally declined in direct proportion to the increased size of the fund, with the exception of the investment expense ratio for funds with greater than $100,000 to $200,000. SMSFs with $50,000 or less in assets had the highest average expense ratios (for total expenses, administration and operating expenses, and investment expenses), of 14%, 9% and 5% respectively. This compares to SMSFs with more than $500,000 in assets that had an average expense ratio of 2% or less across all expense types (see appendix 1, table 23).
Graph 20: 2016 SMSF expense ratios by fund size
SMSF auditors play a major role in regulating SMSFs. In the year ended 30 June 2016, the average audit fee was $694 and the median audit fee was $550. The median audit fee has remained constant since 2013. (see appendix 1, table 24).
Generally over the four years to 2015, SMSFs reported paying more for audit fees with a slight decline in 2016. In 2016, 37% of SMSFs paid less than $500 in auditor fees, compared to 55% in 2012 (see appendix 1, table 25).
From 2012 to 2013 there was a shift in the proportion of funds paying less than $500 in auditor fees to funds in the higher auditor fees ranges (by 18%), with most moving to the $500 to $999 range. Only 2% of SMSFs paid an auditor fee of $2,000 or more in 2016, which is slightly less than the five-year average of 2.8%.
As part of an annual audit, SMSF auditors must submit auditor contravention reports (ACRs) to us for prescribed SMSF contraventions. Reports range from administrative contraventions to more serious contraventions, such as breaches in relation to investments in in-house assets.
Generally, the percentage of the SMSF population with ACRs remains relatively stable at close to 2% of all SMSFs each year. 36>
In the year ended 30 June 2017, 7,600 SMSFs had ACRs lodged with 14,800 contraventions. This was a decrease from the previous year of 4% in the number of SMSFs with an ACR and a decrease of 28% in the number of contraventions.
To 30 June 2017, just under half (48%) of all contraventions were reported as rectified, with the proportion of rectified contraventions reported increasing over recent years. The most commonly reported contraventions continued to be loans or financial assistance to members (21%), while in-house assets and separation of assets constituted 19% and 13% respectively.
In monetary terms, contraventions relating to in-house assets and separation of assets represented 28% and 24% of all reported contraventions up to 30 June 2017 respectively (see appendix 1, table 26).
28 Based on 2016 SAR lodgments.
29 Based on 2012 to 2016 SAR data.
30 ATO 2017, Self-managed super fund statistical report, June 2017.
31 Based on 2012 to 2016 SAR lodged data.
32 ATO 2017, Self-managed super fund statistical report, June 2017.
33 APRA 2017, June 2016 Annual Superannuation Bulletin, 1 February 2017, excel version Table 9a.
34 Calculations based on 2012 to 2016 SAR reported data.
35 Income and deduction labels are further discussed in the annual Taxation Statistics available on the ATO website.
36 As per ATO ACR data as at 30 June 2017.