Greater investment control is the No. 1 reason why about 1.15 million Australians are choosing to manage their own superannuation via a self-managed superannuation fund (SMSF), new research shows.
A survey of more than 2,000 investors conducted by online trading platform, Stake found 55% of respondents who had a self-managed superannuation fund set it up to gain more investment control.
More Australians are deciding to go this way, with 18,079 net self-managed superannuation funds set up in 2023, according to the Australian Taxation Office. This compares to 10,446 in 2022 and 11,262 in 2021.
ATO figures show there are 616,400 SMSFs in Australia today. Nine in 10 have just one or two members, equating to just under 1.15 million SMSF investors overall.
Superannuation provider Vanguard says the average age at which Australians are establishing their own SMSFs is younger than ever, at 46.
Renae Smith, Chief of Personal Investor, Vanguard Australia, said:
The sustained rebound in SMSF establishment rates reflects the growing interest and confidence among investors in managing their own superannuation funds and the autonomous nature of this cohort.
Their desire for control or choice over investment products or their fund's asset allocation far outweighs the time, effort and complexity required in managing their funds.
Image source: Getty Images
Why do people want to manage their own superannuation?
The Stake survey revealed several other reasons why Australians had chosen to set up an SMSF.
The next most popular reason was the ability to buy property.
In March 2024, Australian SMSFs had $49.9 billion invested in residential property, up 11.5% year over year. There was also $91.9 billion invested in commercial property, also up 11.5%.
While SMSF owners cannot live in any residential property they own through their superannuation, they can run their own business out of a commercial property owned through their SMSF.
This is likely one of the reasons why there are more self-managed superannuation monies invested in commercial property than residential property.
The Stake survey also found cost-effectiveness was a driver for 27% of investors with SMSFs.
Additionally, 26% of SMSF investors said they felt there was greater potential for better returns if they managed their superannuation themselves.
Vanguard's own research backs up this implied confidence.
Smith comments that SMSF trustees are nearly twice as likely to feel highly confident in funding their desired retirement lifestyle than members of APRA-regulated retail superannuation funds.
However, it's worth noting that SMSF members tend to have more superannuation savings than average workers, which likely contributes to those higher confidence levels.
According to the latest full-year financial data published by the ATO (FY22), the average wealth per SMSF member is $780,254, and the median is $467,187.
This compares to an average superannuation balance of $404,553 and a median balance of $198,715 among all Australians aged between 65 and 69 years (the current 'retirement age' is 67 years).
ASX shares popular with SMSF members
Of the $933 billion managed through self-managed superannuation funds, $271 billion is invested in ASX shares. There is $145 billion in cash and term deposits and $122.5 billion in unlisted trusts.
Super Guide reports that the most popular ASX shares selected by SMSFs for investment are:
- BHP Group Ltd (ASX: BHP) shares (48% of SMSFs holding ASX shares are invested in BHP)
- Woodside Energy Group Ltd (ASX: WDS) shares (45.6%)
- Westpac Banking Corp (ASX: WBC) shares (40.9%)
- Commonwealth Bank of Australia (ASX: CBA) shares (39.1%)
- National Australia Bank Ltd (ASX: NAB) shares (38.9%)
As we recently reported, Vanguard says there has been a "shift in asset allocations", with SMSF trustees doubling their allocation to exchange-traded funds (ETFs) in 2024.
