Industry funds still have a way to go on SMSFs
As competition continues to heat up between self-managed super funds (SMSFs) and their industry superannuation counterparts, Deloitte's lead superannuation partner Russell Mason believes there is still plenty to appeal to fund members on both sides of the fence.
"Industry funds, I think, have made some big steps in recent times," he said. "And I think offering ASX200 (direct investment) options is a good step in the right direction.
"However, I think they've got a long way to go to fully counter SMSFs," Mason continued.
"SMSFs offer things that can be described as off-platform assets — geared assets that traditional retail and industry funds, at this stage, simply can't offer.
"So there's still a lot of appeal in that area."
Mason suggested that market share and the popularity of SMSFs could well be dictated by performance.
"It will also, I think, depend upon the performance of industry and retail funds," he said. "My view is that part of what helped the incredible growth of SMSFs over the last few years was the global financial crisis, where we had two years of negative returns.
"Quite wrongly in most cases, many investors blamed their super funds for losing the money," Mason continued. "But if I was in a heavily weighted equity option, no one could have prevented the market from going down.
"It was a global phenomenon, so unless I moved my money across to cash or something very conservative, I was always going to go backwards."
Yet the reality, according to Mason, was that the downside protection fund members were looking for was just as possible within an industry or retail super fund.
"But again and again I saw people saying that the retail fund or their industry fund had lost them money," he said.
"They'd say, ‘I'm going to move to an SMSF, that will give me better protection.'
"Of course, you could have had that protection within those traditional funds if you'd moved to the right options, but people didn't see it that way," Mason continued.
"So, for me, it's going to be interesting to see what happens as markets turn around.
"If we see strong returns this financial year, as I hope we do, it will be interesting to see whether people will reassess and query whether an SMSF is for them."
Recommended for you
AMP is to launch a digital advice service to provide retirement advice to members of its AMP Super Fund, in partnership with Bravura Solutions.
Unveiling its performance for the calendar year 2024, AMP has noted a “careful” investment in bitcoin futures proved beneficial for its superannuation members.
SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positive” returns.
The second tranche of DBFO reforms has received strong support from superannuation funds and insurers, with a new class of advisers aimed to support Australians with their retirement planning.
