Diversifying Investments: Boosting Returns for SMSFs
A recent study from the University of Adelaide shows that spreading your money across different types of investments is a good idea. They looked at over 318,000 self-managed super funds (SMSFs) from July 2017 to June 2019. The study found that SMSFs with a mix of different types of assets, like cash, stocks, and trusts, generally made more money.
The more diverse the investments (up to four different types), the better the returns—between 1% to 3% more on average. Beyond four types, the returns still improved, but not as much. This matches what experts say about investing: the more diverse your investments, the better your chances of making money.
The study also found that SMSFs, which are smaller funds managed by individuals, had more ups and downs in returns compared to bigger funds. This highlights how important it is to get professional advice and have a smart plan for investing.
Lastly, the study discovered that SMSFs with over $200,000 and a mix of investments tended to do better than larger regulated funds in 2 out of 3 years between 2017 and 2019.
- Spreading investments boosts returns for SMSFs.
- Each added asset class contributes to a 1% to 3% increase in median returns.
- Gains continue beyond four asset classes but at reduced rates.
- Higher diversification correlates with better performance.
- SMSFs show more varied returns than larger funds, highlighting the need for professional advice.
- SMSFs with over $200,000 and diversified portfolios tend to outperform regulated funds in 2 out of 3 years (2017-2019).
This information is just general, and it’s not advice for your investments. The details in this blog are general and don’t consider your personal goals, money situation, or needs. Before you make any decisions, think about how this advice fits with your own situation.
It’s a good idea to talk to an accountant or a licensed financial adviser for personalised guidance. Roger Boghani tax & business services isn’t responsible for any actions you take without seeking advice from a professional.
