POWERED BY MOMENTUM MEDIA
ASIC removes minimum threshold from SMSF guidance
The Australian Securities and Investments Commission (ASIC) has decided to remove a $500,000 as an indicator of the ‘appropriateness of advice’ to establish a self-managed superannuation fund.
In updated guidance to SMSF advice, the regulator opted to no longer nominate a minimum threshold.
It did point out that fund expenses were proportionally higher for an SMSF and net returns were lower for low-balance funds.
SMSF Association deputy chief executive and director of policy & education, Peter Burgess, said the move was a “significant breakthrough” and followed research by the University of Adelaide that there was no material difference in performance for SMSFs between $200,000 and $500,000.
He said: “In particular, references in ASIC INFO 206 to SMSFs with balances below $500,000 as having lower investment returns and will often be uncompetitive compared with APRA-regulated funds was at odds with the findings of the University of Adelaide research conducted on a sizeable proportion of the SMSF sector.
“It’s worth repeating that the University of Adelaide research found no material differences in performance patterns for SMSFs between $200,000 and $500,000, so the notion that smaller SMSFs in this range deliver materially lower investment, on average, than larger SMSFs in this range is not supported by the research. The research shows that a more appropriate threshold is $200,000.
“So, it’s extremely pleasing that the regulator has taken heed of this research and our representations on this issue and has removed references to the $500,000 threshold.”
However, he noted SMSFs which were less than $200,000 were likely to achieve considerably lower net investment returns than those with a higher volume of assets.
Burgess also welcomed ASIC’s comments about the need for advisers to have specialist knowledge about SMSFs.
AUTHOR
Laura Dew
Laura Dew is editor at Super Review. Prior to joining SR, she spent five years working at Investment Week in the UK covering asset and wealth management.
Recommended for you
The impact of identity theft and its threat to superannuation savings were highlighted in a case that went before the Federal Court at the end of 2023.
A recent NSW Supreme Court decision is an important reminder that while super funds may be subject to restrictive superannuation and tax laws, in essence they are still a trust and subject to equitable and common law claims, says a legal expert.
New research from the University of Adelaide has found SMSFs outperformed APRA funds by more than 4 per cent in 2021–22.
The SMSF Association has made a number of policy recommendations for the superannuation sector in its pre-budget submission to the government.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Ausbil Active Dividend Income Dis AUD
127.58 3 y p.a(%)
2
Spire Oaktree Opportunities XI Second Close
32.68 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.72 3 y p.a(%)
4
Spire Oaktree Opportunities XI First Close USD
31.36 3 y p.a(%)
5
Fidante Credit Suisse Global Private Equity
29.60 3 y p.a(%)
