Academic literature on the topic 'Self managed superannuation funds'

Self-managed superannuation funds (SMSFs) – small retirement savings funds with four or fewer members – now manage almost one-third of retirement savings in Australia, and serve over 1 million members. The number of SMSFs has increased to more than half a million in two decades, yet little is known about the reasons people start the funds and how they operate. We use a survey of more than 500 SMSF members and 500 large superannuation fund members to analyse why SMSF members commence and manage their own fund, compared to similar people who stay with a large fund. We find that control over investments and tax minimisation are the most common reasons for starting a SMSF, while satisfaction with large funds and unwillingness to take on the administrative burden of self-management are the most common reasons for not doing so. SMSF members do not show any greater financial skills than non-members, but they do display overconfidence, a higher risk tolerance and a more trusting attitude to financial professionals. Model results show that the majority of SMSF members start their funds at the suggestion of financial professionals. We also show that those who say they are thinking about starting a SMSF are different in significant ways from the eventual SMSF members, further evidence of the influence of the advice industry.

Purpose The purpose of this paper is to showcase empirical findings in the literature relating to Australian superannuation fund performance in the pre-reform period, from 2000 to 2014. Design/methodology/approach The authors synthesize Australian superannuation performance studies in an attempt to identify empirical approaches employed in the academic literature, showcase findings and uncover themes for future research. Findings The review highlights the following findings in the literature: actively managed “retail” superannuation funds appear to underperform passive index and/or portfolio approaches; high management fees and preference for liquid, less growth-orientated assets may be further undermining performance. It also reveals the need for future research to assess whether the recent government inquiries and the related reformative measures have achieved the desired effect of improving the Australian superannuation system. The authors therefore identify three areas of investigation that will cater for this research need: the fund performance of not-for-profit fund and self-managed super fund; the efficiency of super funds; and the appropriateness of wholesale fund benchmarks. Originality value It is expected that superannuation fund performance will be subject to heightened scrutiny to assess the effectiveness of recent legislative changes resulting from the Stronger Super reform and other public inquiries. This study provides a timely, substantive and informative review of empirical findings pertaining to Australian superannuation performance in the pre-reform period to assist researchers looking to conduct further empirical research on this topic.

Research suggests that Australian bankrupts are increasingly older, have professional backgrounds and generally enjoy higher levels of income than has previously been the case. Significantly, available data also indicates that the numbers of persons entering into bankruptcy hold greater levels of real property, and associated mortgage debt, than in previous decades. Given these trends, the importance of protecting superannuation funds becomes paramount to a bankrupt. However, this paper argues that there is a need to balance the protected asset status of superannuation funds with other objectives, such as achieving a fair distribution of the bankrupt’s assets among creditors. This paper examines the extent to which this balance is achieved, particularly in the context of self-managed superannuation funds.

SUMMARY Using proprietary Australian Taxation Office (ATO) data, this study examines audit pricing, service bundling, and independence issues in the self-managed superannuation fund (SMSF) sector, the fastest growing and largest segment of the Australian $2 trillion retirement savings industry. We consider the impact of partner-level scale effects for a large sample of SMSF audits for the three years to June 2010. After controlling for factors known to determine audit fees, we find evidence of fee discounting by partners with large client portfolios. However, when the dependent variable is redefined to the total “bundle” of services (including audit and non-audit fees), the firms of partners with larger client portfolios are shown to earn bundling fee premiums. This finding suggests industry specialists price strategically using audits as a conduit to supply higher margin non-audit services (NAS) to clients with more resources. Last, we find no evidence the supply of NAS impairs auditor independence, alleviating joint supply concerns raised in the Cooper Review.

In this paper the authors extend the analysis in Woodward and Brooks (2010) to derive a generalized form of Merton's (1981) dual beta market timing model that allows for continuous adjustment of portfolio beta in response to changing market conditions, and also includes the dual beta model as a special case. The model provides a more realistic representation of the fund return generation process. Using this model the authors test the market timing skills of fund managers for a sample of Australian superannuation funds for the period 1990 to 2002. The authors find that managed funds in which investors voluntarily select a given fund (retail funds) experience frequent rebalancing when compared to managed funds in which the investors' contribution is involuntary (wholesale funds). The authors relate the greater sensitivity to all changes in market conditions of retail funds to higher expenses and poor performance that was found in a recent study by Langford, Faff and Marisetty (2006). The results have important implications for Australian superannuation policy, since the Australian Government, effective from 1st July 2005, has required all funds to introduce voluntary contribution schemes.

This research discusses the use of Delta in regulating the investment behaviour of the Trustees of Self-Managed Superannuation Funds (SMSFs) who use Exchange Traded Options (ETOs) in their investment strategies. An ETO represents a contract between two parties, giving the taker (the buyer) the right, but not the obligation, to buy or sell a parcel of shares at a predetermined price, on or before a predetermined date, to or from the writer (the seller). It is acceptable for SMSF Trustees to use ETO investments as part of their overall investment strategy, providing that leverage or mere speculation are not the reasons behind that investment. It is important to note that neither the Regulator, the Australian Taxation Office (ATO), nor its predecessor, the Australian Prudential Regulatory Authority (APRA), actually state what constitutes 'speculation', or what the allowable uses for derivatives are. There are no practical guidelines. This is a key issue for this research, which aims, as practically as possible, to fill these crucial gaps. A Trustee must abide by their superannuation fund's overriding covenants and investment strategy, and inform its members, through Risk Management Statements, of the trust's derivative strategy. While ETOs can be used to manage risk, they also carry a level of risk themselves. Delta measures an ETO's value movement in correlation with a movement in the option's underlying share price. An ETO carrying a low Delta generally means a cheaper price (premium) per contract than an option carrying a higher Delta. The lower the Delta, however, the lower the chance there is of a positive result for the buyer. This research shows that an ETO Delta of less than 0.2 gives results in favour of buyers in only 11 out of 100 occurrences. This figure rises to 42 out of 100 when Delta is greater than 0.8. From the sampled data, there is an overall financial loss to the buyer of -1.91%, with the financial return results being mixed at all levels of Delta. The overall return results have been compiled without preference to market direction, and clearly highlight the natural premium bias (which the buyer pays) to the seller. What this data does is reenforce the need for Trustees to have a solid view of market directions, or a set strategy in place, as buyers of ETOs. The conclusions drawn from the findings show that the chance of loss (when buying), or gain (when selling) ETOs with a Delta of; - less than 0.20 is 89%; - less than 0.40 is 74%; - less than 0.60 is 66%; - less than 0.80 is 57%; - greater than 0.80 is 58%; For example, a Trustee buying an ETO with a Delta of less than 0.20, faces an 89% chance of loss; a Trustee selling an ETO with a Delta of less than 0.20, faces an 89% chance of gain. The findings on overall financial returns (profit or loss) offer additional support to this critical review of Delta as a risk measurement tool. Whist it is impossible to know the motives or actual positions of portfolio managers of SMSF at any time, the aim of the thesis is to provide a measurement tool that can be used to assist the trustee at any given time by measuring the option risk element alone. When interpreting the findings, the reader must remember that ETO strategies are numerous, and a high-risk profile for one strategy may represent a low risk for another. Further to this, an ETO strategy's risk profile may change with the overlaying of another ETO. For example, where a Call option is bought, the risk involved in that purchase is represented by the premium paid. However, another Call option can then be sold against that position, with a later (or earlier) date to expiry, and with a higher strike price. This 'overlay' reduces the initial risk, but impacts on the maximum gain. It is vital that Trustees have a solid understanding of the basics of ETO strategies before considering using Delta as a measure of risk. The research proposes some guidelines Trustees can use when assessing an ETO strategy against their derivative/investment risk profile. For example, a Trustee buying an ETO with a Delta of less than 0.20, faces an 89% chance of loss; a Trustee selling an ETO with a Delta of less than 0.20, faces an 89% chance of gain. The findings on overall financial returns (profit or loss) offer additional support to this critical review of Delta as a risk measurement tool. Whist it is impossible to know the motives or actual positions of portfolio managers of SMSF at any time, the aim of the thesis is to provide a measurement tool that can be used to assist the trustee at any given time by measuring the option risk element alone. When interpreting the findings, the reader must remember that ETO strategies are numerous, and a high-risk profile for one strategy may represent a low risk for another. Further to this, an ETO strategy's risk profile may change with the overlaying of another ETO. For example, where a Call option is bought, the risk involved in that purchase is represented by the premium paid. However, another Call option can then be sold against that position, with a later (or earlier) date to expiry, and with a higher strike price. This 'overlay' reduces the initial risk, but impacts on the maximum gain. It is vital that Trustees have a solid understanding of the basics of ETO strategies before considering using Delta as a measure of risk. The research proposes some guidelines Trustees can use when assessing an ETO strategy against their derivative/investment risk profile. (table inserted) The findings from 2400 data samples show strong trends in support of the underlying premise (see Figure: Positive Results Versus Delta (ETO Buyers) below). Given these findings, the research concludes that Delta can be used as a measure of risk by SMSF Trustees. Delta may not be suitable, however, for measuring multiple layers of combined ETO positions, a type of derivative strategy not suited to or usual in the context of measuring risk within a SMSF. (table inserted) There is a major difference between simple and simplistic solutions offering practical answers in an environment of increasing complexity. Often, simple solutions offer far more value to the less experienced, when compared to complex ones, especially given the growing number of SMSFs, and the increasing lack of expertise in the areas of superannuation and risk management that this growth implies.

Thesis (DBA) - Swinburne University of Technology, 2006.
Submitted to the partial fulfilment of the requirements for the degree of Doctor of Business Administration, Australasian Graduate School of Management, Swinburne University of Technology, 2006. Typescript. Includes bibliographical references (p. 89-92).

The thesis examines the consequences of household and individual financial decision making in three different areas: mortgages, superannuation and family businesses. The questions posed in each case cannot be tackled using conventional financial databases. I therefore address each case by applying survey methods. First, I examine the socioeconomic impacts of households choosing to take out shared appreciation mortgages (SAMs). Tax and regulatory barriers have impeded the development and use of SAMs in many mortgage markets. Empirical studies on household impacts stemming from SAMs have therefore also been limited. However, the State Government of South Australia has implemented SAMs as a means of enabling and encouraging low-income homeownership, thereby creating a unique dataset of SAM financed households. I survey this population, finding that SAM borrowers benefit from increased budgetary expenditure on discretionary items following take-up, while simultaneously saving on some non-discretionary items relative to control samples of renters and other homeowners from the general population. Furthermore, SAM homeownership also appears to be associated with increased levels of neighbourhood satisfaction and community involvement for borrowers. The results from this study indicate that SAM financed homeownership leads to changes in household behaviour and deserves further consideration by the housing industry and research community. Second, I examine the influence of investor knowledge and the cognitive bias which arises from overconfidence on the advice seeking behaviour of investors in self-managed superannuation funds (SMSFs). I trace whether overestimating one’s own technical and financial abilities can hinder the willingness to seek advice. I identify a subset of investors who are not knowledgeable and yet do not seek advice to compensate for this. These investors appear to be overconfident in their ability to manage their SMSF, despite holding under-diversified and less financially sophisticated portfolios when compared to their peers. Given the global rise in investors choosing to manage their own retirement funds and the importance of seeking advice in this context, there are direct policy implications from these findings. They suggest a need to identify and target self-managed retirement investors who display overconfidence since they are the most likely to manage under-performing SMSFs in the longer term. Third, I examine links between the succession planning decisions, operational management and financial performance of small-to-medium sized agricultural enterprises (SMAEs). I differentiate between written, verbal and other succession arrangements to investigate how each type embeds within the broader operational environment of SMAE households. Further tests are performed to see if differences in financial outcomes can be linked with a particular approach to succession. The results indicate that succession planning decisions are positively associated with the use of written business plans and crop insurance, but that this is only true for SMAEs with professionalised written succession arrangements. This was also the only cohort associated with improved return on assets relative to peer agricultural businesses with alternative succession arrangements in place. Given the critical role of succession in the long-term sustainability of family business households, these results have direct implications for farmers and practitioners advising the private agricultural sector. They suggest that the value in planning succession at least partly lies in the value of going down pathways for professionalization.
Thesis (Ph.D.) -- University of Adelaide, Business School, 2015

It is an accepted standard that any new interpretation at a heritage site needs to be stimulating and engaging, while appealing to the widest audience possible (Carver 2008a–c) in the most accessible manner. A number of events in the last decade, such as the repatriation of indigenous human tissue and material culture (see Jenkins this volume), have encouraged debate around artefact ownership and sensitive presentation in respect of minority cultural traditions and values (see Rathouse this volume). As well as an increased awareness in professional bodies, there has been a perceived heightened sensitivity of visitors, and their awareness of propriety and respect of different cultures. For many English Heritage sites open to the public, including ancient monuments, historic buildings, their collections and the stories attached to them have links to sensitive subjects. Some have the power to elicit strong emotions in the modern public. As well as human remains and death memorials, these sites include stories about slavery (e.g. Kenwood House), theories of evolution (Darwin’s home at Down House), religious persecution (e.g. Clifford’s Tower; Mount Grace), prisoner of war experiences (e.g. Portchester Castle), and human destitution and poverty (e.g. the Poor House at Framlingham Castle). In designing displays, considerable emphasis is placed on tone and language to sensitively guide the visitor through an engaging yet thoughtful presentation. As the discipline of interpretation is the visitor-facing product building from many academic fields, it is open to influence. This openness to different ideas, however, can occasionally lapse into a lack of cohesion and self-doubt (see Jenkins 2011). An example of this ambivalence is particularly evident in the display of human remains which has shifted from a frequently low-brow form of morbid entertainment (such as the display of Egyptian mummies in Victorian times) to that of occasionally disproportionate respect and shielding (see Jenkins this volume). Where time and funds permit, this is usually managed by the use of interpretation evaluation, both formative (before the interpretation is created) and summative (after the interpretation has been installed). In addition, organizations such as English Heritage have also benefited from internal and externally appointed scientific advisors who can authoritatively aid the navigation of delicate subjects such as the presentation of pre-Christian era human remains (for example at Avebury; see Giles and Williams this volume).