Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 315

SMSF growth slower but future remains strong

A decade ago, over 40,000 SMSFs a year were being established. It’s now closer to 20,000, but that looks more like a maturity than a sector decline. The 2019 Vanguard/Investment Trends SMSF Reports show funds are being established when trustees are at a younger age, and one in five institutional super fund members is considering setting up an SMSF in the near future.

Superannuation remains a contestable and growing space, despite the banks withdrawing from wealth management and many fund managers struggling to retain money.

The Reports show responses from 5,000 SMSF trustees and 300 financial planners who advise SMSFs. This sector holds $750 billion compared with $1.8 trillion in all the large funds. There are now 600,000 SMSFs with average assets of $1.2 million, although the more meaningful median measure is $693,000, usually between two members. At $350,000 each to last for decades of retirement, SMSFs are not only used by wealthy people.

More defensive and diversified

Despite low interest rate, SMSFs remain heavily invested in cash and cash products, rising to 25% of assets in 2019 at the expense of a small drop in unlisted managed funds. Over the last eight years, the amount in listed investments such as ETFs, LIC and REITs has doubled, with much of it now going into fixed interest and global equities.

Source: Investment Trends 2019

SMSF trustees intend investing further in blue chip shares, with 54% nominating this investment choice for the next 12 months. While SMSFs are seeking overseas exposure, 52% of respondents still cite lack of knowledge about overseas markets and currency risk as a barrier.

Explaining the defensive mood, 31% say building a sustainable income stream is the main investment goal, while a rapidly-rising proportion now at 15% say protecting their assets against market falls is the main goal.

Unmet need for advice

SMSF trustees want advice on estate planning, tax and income strategies, post-retirement planning, portfolio strategies and investment selection. About 15% of trustees say managing their SMSF takes more time than expected, with investment selection the clear leader among the hardest aspects of running a fund.

The number of SMSF trustees who use a financial planner remains unchanged but overall satisfaction among clients is at a seven-year low. With multiple responses allowed, SMSF trustees say lack of confidence in adviser expertise (32%), the level of fees (29%) and difficulty finding a skilled adviser (22%) are the three main reasons for unmet advice needs. About a third (36%) of advisers expect their SMSF business to increase over the next three years.

Movements between types of funds

The Reports show 20% of large super fund members are considering setting up an SMSF, including 5% already doing it and 5% planning the move in the next 12 months. However, most of these are stated intentions and far fewer people actually take the step.

On the other hand, between 2013 and 2019, there is a massive increase in the number of trustees who have considered closing their SMSF and moving to a large fund, from only 4% to 20% (17% industry fund, 3% retail fund). The Royal Commission was a major factor, as well as the franking debate.

However, Investment Trends CEO, Michael Blomfield, said many factors favour retention of SMSFs:

“Number one is that people think their fund is performing okay. They also want greater access to certain asset classes, including property, infrastructure, small cap funds and responsible investment options, and to be able to give them greater weighting. It is also the flexibility to choose which managers they use, whether they use listed solutions or unlisted solutions, or they opt to buy Australian firms directly to access specific sectors.”

The Investment Trends/Vanguard Reports also show the thoughts of potential new SMSF trustees. While reasons such as ‘more control’ and ‘to achieve better returns’ are high, it’s a little disconcerting that ‘advice from a friend’ is the main factor, while accountants and financial planners remain highly influential. It begs the question whether an SMSF is in the best interests of so many people, especially when 17% say they ‘can make better investments than super funds’.

Source: Investment Trends 2019.

It is also becoming more common to hold an institutional super fund as well as an SMSF, with half of new SMSF trustees also retaining their former super fund, perhaps for access to favourable insurance rates. This was only 29% as recently as 2017.

 

Graham Hand is Managing Editor of Cuffelinks. This article is general information and does not consider the circumstances of any investor.

 

  •   17 July 2019
  •      
  •   

 

Leave a Comment:

RELATED ARTICLES

Red flags to watch out for when considering an SMSF

SMSF estate planning: Eight things to consider

Clime time: Asset allocation decisions for SMSFs

banner

Most viewed in recent weeks

It’s time for LICs to die

A high-profile dividend cut and a prominent fund manager’s apology have reignited a long-running debate. If investors can access similar exposures more cheaply and efficiently elsewhere, what exactly is keeping LICs alive?

Testamentary trusts survived the trust tax. The drafting battle has just begun.

The fight over testamentary trusts looked settled. Then the draft legislation arrived. Hidden in a technical detail is a question that could force many families to rethink wills they thought were already future-proof.

Is it time to bail on Australian stocks?

For generations, Australian investors have backed banks, miners and dividends. But has that loyalty come at a cost? A look at the numbers raises an uncomfortable question about where future returns will come from.

The new capital gains tax trap for your portfolio

Investors have long accepted one portfolio rule without much question. A major tax shift could change that calculation entirely, forcing difficult trade-offs between risk, discipline and an overlooked cost lurking beneath.

How the typical Australian Family could save $844,350 in taxes

The value of a testamentary trust is not determined by wealth alone. Depending on circumstances, it can reduce the tax burden on inherited income, create efficiencies and help build intergenerational wealth.

The housing slide could become a crash

House prices are sliding across Australia, yet the most dangerous ingredient for a housing crash is still missing. If job losses surge amid growing economic risks, today's correction could become a historic property downturn.

Latest Updates

Retirement

The retirement scorecard: how many of these questions can you answer?

From the maths of retirement, estimating spending and picking the right asset allocation to survive a poor decade, here are the questions every retiree – current or future – should be able to answer for themselves.

2026 is not 1999

The US market looks eerily similar to the dot-com era with soaring AI spending and tech giants dominating returns. But one difference separates today’s boom from the dot-com bubble and it could determine what happens next.

Planning

Taxing time for trusts

Trusts are facing a shake-up, but an overhaul may not be necessary. Families can explore restructuring strategies that preserve succession and the asset protection benefits that have made these structures valuable.

Economy

Why the US economy is stronger than you might think

War, inflation and higher rates were expected to derail America. But has the market got it wrong? Three forces are driving the economy beyond expectations, revealing implications for stock prices and portfolio positioning.

Gold

How much trust is in your portfolio?

Everyone talks about diversifying assets. Far fewer think about diversifying trust. As inflation, debt and market assumptions collide, the question is whether portfolios need greater protection from unexpected outcomes.

Retirement

Retirement in reality - 7 months in

Seven months into retirement, I'm still uncovering surprises. This month was spent reflecting on the slow pace of health change, the myth of neatly scheduled part-time work and the unexpected persistence of retirement guilt.

The new geography of technology leadership

The next chapter of technology may not belong to the companies or business models many expect. As the landscape shifts, some opportunities are emerging in places that remain surprisingly overlooked by global markets.

Sponsors

Alliances

  • ASA-Logo-RGB-ActiveGreen-web.png

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.