In response to feedback, the ATO stated that it had revised its approach to the way it calculates SMSF investment performance or return on assets (ROA).

The Tax Office stressed, however, that the investment returns data in the overview is only an indicator of performance across the SMSF sector and is not a direct comparison to APRA fund investment performance as the data inputs and methodology used are different.

The ATO statistics indicate that the average return ROA for SMSFs was 0.7 per cent for the 2019-20 financial year.

This was a decrease from an average return of 7.3 per cent in 2018-19 and 3.7 per cent in 2015-16.

The median ROA for SMSFs was -1.6 per cent, down from 4.3 per cent in 2018-19 and 0.2 per cent in 2015-16.

The statistics indicate that while the proportion of SMSFs recording a zero or negative return on assets had improved from 48 per cent in 2015-16 to 26 per cent in 2018-19, it then “plummeted to 61 per cent in 2019-20”.

“This drop in 2019-20 is most likely due to the effect of COVID-19 on financial markets during the last quarter of the 2020 financial year,” the ATO explained.

The proportion of funds with a ROA of greater than 5 per cent increased from 18 per cent in 2015-16 to 46 per cent in 2018-19 but then dropped to 16 per cent in 2019-20.

SMSF expenses saw dip in 2019-20

The ATO statistics indicate that SMSF expenses saw a slight dip in the 2019-20 income year, with the average total expense ratio sitting at 1.16 per cent or $15,300, down 4 per cent from $15,900 in 2018-19 and up 10 per cent from $13,900 in 2015-16.

Median total expenses were $8,200, the same as in 2018–19 and up 16 per cent from $7,100 in 2015-16.

The ATO noted that SMSFs in the retirement phase incurred lower total expenses on average than funds solely in the accumulation phase. Total expenses on average for retirement phase SMSFs were $14,300, while accumulation phase funds incurred total expenses of $16,100 on average.

“Average operating expenses were $6,200, down from $6,400 in 2018-19, and the same as 2015-16,” the ATO said.

The ATO stated that while the average total expense ratio is highest for lower-balance SMSFs, the total dollar value of average and median expenses increased as fund size increased.

“For example, in 2019-20 in the $1 to $50,000 asset range the average total expense ratio was 17.6 per cent, average expenses were $4,400 and median expenses were $2,000,” the Tax Office stated.

“In the greater than $2 million asset range the average total expense ratio was 0.7 per cent but average expenses were $28,600 and median expenses were $15,900.”