Last Friday the ATO released their latest statistical data on SMSF’s as at June 2012. The bottom line is that SMS’s are growing by an average of 32,000 each year or145 each working day! We now have 478,263 SMSF’s registered in Australia and they hold some $439m in assets.
The full details of the report are available on the ATO website here.
What does the investment picture look like at June 2012?
Some interesting data is that:
- There is now more money in Cash and Term Deposits that in Listed Shares.
- SMSF Trustees now have 31% of fund assets in cash vs 23% in June 2004
- Listed shares make up only 30% of assets.
- 96% of SMSF assets are held by people over 35
- 69% of SMSF’s have two trustees
- 62% of SMSF’s are administered in NSM or Victoria
- SMSF’s are getting bigger, with growth in all funds over $500,000
One of the most concerning parts of the data reported is what is referred to as the “Asset Allocation by Asset Value”. Firstly it was a surprise to see that there are SMSF’s in the under $200,000 balance category, but then, there may be a very good reason for this. What was more concerning was that there are SMSF’s with less than $50,000 and of those 56.9% are in cash. You would have to be questioning whether the cost to administer and manager was justified in this situation. Besides, there are some very cheap, simple alternatives where you would be able to get fantastic online interest rates and have a lot less hassle every year. Interestingly there is 43.51% of SMSF’s with balances between $100k and $150k in cash as well. You would have to ask whether the return on investment less costs is justified.
We are an SMSF trustee education website, but sometimes you have to call it as it is. Generally, without knowing exactly why the trustee had chosen an SMSF, and purely looking at the costs, this would appear to be a very costly investment option. Perhaps it is only short term and a holding strategy pending re-investment into the market? We will have to see that the ATO reporting data looks like in future years. That is if the ATO is still managing SMSF’s? We heard this week that perhaps APRA will regulate SMSF’s going forward? Do they have capacity?