The growth in assets in Self Managed Super Funds (SMSFs)
continues unabated with the SMSF sector now comprising nearly
AUD500 billion in assets from just under 500,000 funds; each fund
containing an average of around AUD1 million. The sector now
represents almost one third of the total superannuation assets held
in Australia; a number that continues to surprise (and worry)
government and regulators.
The reasons this phenomenal growth rate has changed little over
time is due to the desire by individuals to have control of their
retirement assets, the continued search for cost savings and the
disappointment many consumers feel with the cost and performance of
managed fund options offered by investment managers in
The onset of and fallout from the GFC continues to provide
additional encouragement for investors to examine the SMSF option
with the numbers of SMSFs rising from 375,000 in June 2008 to
478,000 in June 2012, a whopping 30% increase.
During this same period, the amount of SMSF assets invested in
listed trusts, unlisted trusts and managed funds went from AUD71
billion in June 2008 to AUD77 billion in June 2012. However, this
represented a fall in the share of total SMSF assets held in listed
and unlisted managed funds from 22.75% in June 2008 to 17.2% in
June 2012. Most of this lost market share has ended up in cash or
term deposits which have increased from AUD81.8 billion or 26.1% of
total SMSF assets in June 2008, to AUD134 billion or 30% of total
SMSF assets in June 2012.
Whichever way you look at the numbers, professional fund
managers have not been able to continue to attract the same level
of support from the SMSF sector since the onset of the GFC. They
have lost out significantly to cash and term deposit products
offered by the banks which are now the largest single investment
class favoured by SMSF trustees. The cause of this drift away from
managed funds can not just be attributed to investors losing faith
in underwhelming sharemarkets. During the period June 2008 to June
2012, SMSF trustees took the total amount invested in listed shares
from AUD 122billion to AUD131 billion.
However, the tide may be turning for professional fund managers
as there are signs emerging that they have begun to fight back with
many managed fund products being specifically targeted at SMSFs,
backed by significant marketing and advertising campaigns. This
market fight back by fund managers comes at the same time large
superannuation funds report better investment performance and
interest rates on cash and term deposits continue to decline. At
some point in the near future, the offerings from the fund managers
will start to look more attractive when compared with the returns
available from cash and term deposits from the banks.
If SMSF trustees do start switching out of low yielding cash and
term deposits and come back to local managed funds, an asset
allocation of something approaching the 22% number which SMSF's
maintained in 2008 would see an extra AUD40 billion heading towards
managed funds in the near future.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
K&L Gates has been awarded a 2012 EOWA Employer of Choice
for Women citation acknowledging our commitment to workplace
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
In the years following the global financial crisis of 2008 many Australian investors lost their life savings as financial products failed and the Australian Stock Exchange shed over 3,000 points.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).