ISA compares SMSF and industry fund fees
Industry Super Australia (ISA) — formerly known as the Industry Super Network — has used new research to highlight fee disparity between self-managed super funds (SMSFs) and industry super funds.
In its recent submission to the Australian Securities and Investments Commission, ISA and the Australian Institute of Superannuation Trustees pointed to research using the Australian Taxation Office's data from more than 70,000 SMSFs over a three-year period to show costs associated with setting up and running an SMSF were much higher than previously estimated.
The smallest funds, with assets of up to $50,000, had costs on average of over 7 per cent per annum, while funds of between $50,000 and $100,000 had costs on average of 3.7 per cent.
Both sets of fees are much higher than a major not-for-profit fund which had costs of less than 1 per cent per annum, according to ISA chief economist Dr Sacha Vidler.
"Many SMSFs are established with small accounts, and their costs-to-earnings ratio are unacceptably high, especially when compared to industry and other not-for-profit funds," Vidler said.
"This new research shows that for all but the very largest of SMSF balances, industry funds are a more cost-effective option and also shows that two thirds of SMSFs have a very low level of diversification, with most assets in one asset class."
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