Compliance the biggest concern for SMSFs

The latest AMP Capital/Investment Trends Self-Managed Superannuation Funds (SMSF) Investor Report has revealed compliance is now clearly the number one challenge being faced by people running their own super fund.

The survey showed 32 per cent of respondents now consider keeping up to date with SMSF rule changes the most difficult part of running a fund of this type, up from 16 per cent in 2004.

According to Investment Trends director Mark Johnston, the task of choosing the right type of investment was as much a challenge for SMSF investors as compliance 12 months ago, but the greater emphasis the Australian Taxation Office put on compliance issues throughout 2005 has seen these requirements become the most difficult task in managing a SMSF.

In contrast, SMSF members found it easier to select the appropriate types of investments for their needs in 2005, with 87 per cent of investors claiming it was easy to run a SMSF, compared to 82 per cent in the previous year, and only 17 per cent citing this aspect as the hardest part of running a SMSF.

Moving forward, the study found a greater number of people with a SMSF planned to make managed funds their largest investment type over the next 12 months, with 18 per cent of respondents now signalling this intent compared to 12 per cent in 2004.

Johnston feels the recent strong performance of many managed funds coupled with the time constraints faced by most SMSF members has driven this trend.

To this end, AMP Capital Investors has signalled its intentions to aid this investment pattern in the market with the introduction of several new products aimed at the SMSF market over the next few months.

“We’re going to be producing a limited range initially. They will be diversified funds giving exposure to asset classes people can’t put together themselves. Property will be one area that we’ll be covering, but there will be a number of other asset classes that aren’t your ‘plain vanilla’ Australian shares,” AMP Capital Investors head of private clients Giles Craig said.

While SMSF investors appear to be warming to managed funds, the report also showed their knowledge of platforms had not improved in 2005, with 67 per cent of respondents stating they either hadn’t heard of these products before or did not know what they were.

The AMP Capital/Investment Trends SMSF Investor Report sought the opinions of 2,205 SMSF members across a number of key issues between October and December 2005.