Self-managed super funds often come into consideration during financial planning, particularly for high-income earners. Each quarter, Class Super undertakes a statistics analysis of the SMSFs they administer – approximately 28% (or 170,000) of the estimated number of SMSFs in Australia today. Here’s a quick run down of the top 8 insights from the 2019 SMSF Benchmark Report released by Class in March this year.
1. Over 72% of SMSFs are established as two-member funds from the outset
There was an average of 1.8 members in newly established SMSFs between 2014 and 2018. Using data from 26,100 funds, the majority of funds (over 72%) are established with 2 or more members. As a result, it’s important to consider the overall fund balance, not just the balance of individual members.
2. Multi-member funds give fund members investment clout
It is often debated what the “minimum” amount required is to setup a SMSF to make it viable. In fact, we talked about it in our article “What is a SMSF?”. The Class 2019 SMS Benchmark Report showcased the benefit of pooling SMSF dollars to deliver more investment clout to individual members.
“While the average individual member balance of a newly established fund is around $225k, the average fund balance is nearly $406k (ranging from $355k for a single member fund, to over $500k for 4 member funds)”
3. The average net assets per SMSF in the accumulation phase is $838,000
SMSFs in the accumulation phase account for approximately 52% of funds, and have an average of $838,000 net assets per SMSF. Individual members have an average $441,000 in this phase at an average age of 52 years, increasing to $1,248,000 by an average age of 66 in the Mixed phase.
4. Males have a 42% higher average balance than females when funds are established
Whilst the proportion of males to females within SMSFs are very even (52% vs 48%), the average member balance by gender is significantly different. When SMSFs are established, males have a 42% higher average balance than females, however this reduces to 21% across all SMSFs.
5. Listed shares account for 26.9% of asset allocation
According to the 2019 SMSF benchmark report, listed shares make up 26.9% of the investment portfolio, with a further 20% held in cash and term deposits. More than 60% of SMSF’s are invested in Direct Australian listed securities, and 32% in managed funds. Exchange Traded Funds (ETFs) are leveraged by more than 20% of SMSFs.
6. Banks make up 42% of the top 20 Domestic Listed Securities held by SMSFs
As mentioned previously, more than 60% of SMSFs are invested in domestic listed securities. The Class SMSF Benchmark Report 2019 outlines the top 20 investment holdings, with Westpac Banking Corporation (WBC), National Australia Bank Limited (NAB), Commonwealth Bank of Australia (CBA) and Australia and New Zealand Banking Group Limited (ANZ) all in the top six. A newcomer to the top 20 list this quarter is AGL Energy Limited (AGL) with 11.7% of funds with domestic listed securities holding this security.
7. Managed Funds make up 12.4% of asset holdings
We have often spoken about Managed Funds, and in fact discuss these at great length in our eBook; “Investing in Managed Funds…not!”. The latest 2019 SMSF benchmark report from Class shows that whilst 12.4% of assets are allocated to Managed Funds, more than 30% of their SMSFs have some form of investment in Managed Funds. Topping the list is the Magellan Global Fund, followed by the Platinum International Fund and Platinum Asia Fund. Even these top three funds indicate that SMSFs are in fact investing in international assets, despite claims that they are underinvesting by comparison to APRA funds. Of the top 20 most popular managed funds, 53.4% of assets are international equities and a further 10.5% in international fixed interest assets.
8. Tech companies make up 60% of the top 20 international share holdings
It goes without saying that we live in the digital era, and the top 20 investment holdings in direct international shares certainly reflects this. Within the top 20 you find the likes of Google, Amazon, Apple, Microsoft and Facebook – all of which are certainly well-known household brands. Outside of this there are, of course, several within the banking and finance sector such as Visa, PayPal, MasterCard, Bank of America, Wells Fargo & Co and the Lloyds Banking Group.
The Wrap Up
Based on data compiled by Class from the wider market, the average SMSF asset value is $1.4 million, with an average of $738,153 assets per member. This includes funds from their accumulation right through to pension. By comparison, ASFA’s report on superannuation account balances by age and gender released in late 2017 show the average fund balance for Australians to be $153,000 for men and $102,000 for women (excluding people with a nil balance).
The number of self-managed super funds has risen in recent years, as too has the average individual member balance and the overall fund balance. There are some very distinct trends that can be seen within the newly established SMSFs, particularly in terms of asset class allocation and the variance between individual balance by gender. To determine whether an SMSF is the right option for you, contact us to arrange a Financial Road Map Interview.