According to Rainmaker Information, this is because a quarter of the SMSF sector is held in cash and about 45 per cent is held in shares.

In comparison, other super funds hold only 10 per cent in cash and 60 per cent in shares on average. 

Rainmaker Information executive director of research Alex Dunnin said the heavy exposure to low-risk assets like cash may prove to be “fruitful” as they may be better protected than the average not-for-profit and retail fund. 

“Some super funds’ diversified default investment options have fallen 10–15 per cent as a result of the current market conditions,” Mr Dunnin said. 

However, according to Rainmaker Information’s Advantage Report, contributions into SMSFs and small APRA funds dropped 60 per cent over the last two years. 

In 2012, SMSFs peaked at 33 per cent of all superannuation funds under management, but have since dropped to 26 per cent, or around $750 billion. 

“A higher than average exposure to cash previously dampened the returns of the average SMSF when compared to a retail or not-for-profit fund, so perhaps it also damaged their appeal,” Mr Dunnin said. 

Rainmaker Information has said the number of SMSFs started each year has steadily fallen over the last decade, with only 12,000 started in 2019. 

At the same time, overall annual super contributions have fallen from $157 billion to $130 billion, and Rainmaker Information attributes 90 per cent of the reductions to SMSFs.

The firm has said a “key cause” in the drop appears to be the introduction of the transfer balance cap (TBC) in 2017 which removed unlimited tax concessions for retirees with large account balances. 

“The drop in contributions has been so extreme that SMSFs are only marginally ahead of the retail fund segment, which fell out of favour with Australians after the global financial crisis,” Mr Dunnin said.

Rainmaker Information has said other factors in declining contributions include increased regulatory scrutiny, reductions in their taxation advantages and “persistent attention” on the segment’s low benchmark investment returns.