1. Average SMSF operating expenses by fund size – although not an exact match, it's close enough to this with total costs of equivalent account sizes in collective funds.

2. Average SMSF return on assets (ROA) by fund size – again, while not an exact match, we can compare this with average investment income (not reported investment returns) of collective funds.

Let's look first at costs, via average SMSF operating expenses versus large collective funds:

This comparison is actually flattering to SMSFs given there are increasing numbers of SMSF-like products offered by collective funds with fixed dollar costs of around $250 per year. For a balance of $1 million, this would be a fee of 0.025% (2.5bps).

Now, let's look at returns, via average SMSF return on assets versus collective funds

A few things are clear – even from just a cursory glance:

- SMSFs are astronomically expensive and inefficient for average funds of under $200,000. They cost triple or more the costs of a typical large collective fund, and underperform by more than 5% per annum. Even worse, the ATO data suggests that costs are rising for funds of less than $500,000.

- The SMSF cost story is not remotely compelling until you get to average SMSF fund sizes of $1 million or more. Up to $1 million, it is line ball at best.

- The SMSF returns story doesn’t appear compelling at any balance. As the above table demonstrates, the only material outperformance by SMSF occurred for SMSFs averaging $2 million or more in 2012. There is an argument that SMSFs should structurally underperform because more are in the pension phase, with higher exposures to cash deposits, but that doesn't explain all of the differentials above.

Averages conceal many things of course. There are SMSFs which are much lower cost and higher performing than average, and equally there are costly and poor performing collective funds.

But the data above is comprehensive, so it's hard to argue with. And it shows that the story for SMSFs below $500,000 – well, there really is no story right now. For the average SMSF below $500,000, the current reality is much higher costs and lower returns than members would have obtained in many readily available collective funds.

The irony is that the picture was exactly the same when the Super System Review looked at SMSF statistics in 2009. The tragedy is that those statistics were ignored.

For the industry, the message is also clear. It wants to engage with the SMSF segment as a source of growth in a landscape where organic growth is getting harder to come by. Fair enough. And it should – the data shows there is an urgent need for more cost-effective, better performing SMSF outcomes than those that too often currently prevail, especially if smaller SMSF funds are ever to make sense.

Andrew Baker is managing partner at Tria Investment Partners.