Class data reveals SMSFs outperform APRA-regulated funds
1 November 2018 – In April 2018 the Productivity Commission’s Superannuation: Assessing Efficiency and Competitiveness, Draft Report was released, suggesting that APRA-regulated funds are outperforming SMSFs.
Class has refuted this claim, citing the inconsistent use of formulae to calculate super fund performance. The ATO’s Return on Assets (ROA) used for SMSFs and APRA’s Rate of Return (ROR) used for APRA funds has not only produced misleading results but has also grossly underestimated SMSF returns.
A like-for-like comparison of super funds reveals that the ROA formula produces an average 5.59% return for SMSFs vs a 4.98% return for APRA funds. If applying the ROR formula, the results improve for all funds with an average 6.71% return for SMSFs vs a 5.58% return for APRA funds. Interestingly, the ROR 6.71% average return for SMSFs outperforms the Productivity Commission benchmarks for both listed, and listed plus unlisted assets.
Kevin Bungard, Class CEO said: “The competing approaches used to report super performance deliver significant differences and given the dual regulators are responsible for an industry worth over $2.5 trillion, it’s time for APRA and the ATO to agree on a consistent approach to fund performance reporting”.
Download the Class SMSF Benchmark Report here.