As already reported by Smart Investing, just 58 SMSFs DIY funds closed in the latest March quarter - way below the long-term averages, even for monthly closures.
Just consider that a large percentage of these closed funds would have paid out all of their benefits to retired members; some of whom would have died.
The small number of closures invites the straightforward question: Why so few?
A fund can be closed with relatively little fuss provided some necessary requirements are followed, including the rolling over of members' super savings into other complying funds, and the lodging of final tax and regulatory returns.
There is definitely not an abundance of red-tape discouraging more funds from being wound up.
The high investment returns of the past four years would mean that the average SMSF with about 50% of its assets in Australian shares has done well. And when a fund is doing okay, there is usually little incentive to close it, particularly to change to a large fund.
But there must be a number of SMSFs out there that are struggling in terms of returns - perhaps partly because of poorly diversified portfolios - and with the trustee-members not bothering to call it a day. Inertia could take a heavy toll on their standard of living in retirement.
It would be a valuable exercise to examine, if you don't already, how the returns of your SMSF measure against the longer-term median returns reported by the large retail and industry funds as well as the corporate master trusts.
Of course, many people consider more than returns alone when deciding whether to establish a SMSF. Some are seeking more independence and more control. Some, particularly those with high super savings, aim to save costs. And many, of course, want a SMSF to hold such assets as business real estate and unlisted shares that cannot be held in a large fund.
But if the returns of your SMSF have been consistently poor or volatile, it may be well worth considering gaining professional investment advice, and perhaps questioning whether having your own fund is a smart move for you. Smart Investing
By Robin Bowerman
19th July 2007
20th-July-2007 |