SMSFs are losing the middle-aged spread THERE is a fascinating change in the population of people using Self Managed Super Funds. Overall, the numbers are quite small but the trend is now fully established having first appeared about three years ago. Based on data recently issued by the Australian Taxation Office at June 30 this year, 18 per cent of SMSFs had at least one member aged under 45, while 5.5 per cent of all SMSFs had at least one member aged under 35. For funds established during the June quarter, 41 per cent of them had at least one member under 45. Thirteen per cent of these funds had at least one member under 35. In June last year, approximately 55 per cent of SMSF members had income less than $60,000. However, for new SMSFs established in June this year, the tax office estimates that only 45 per cent of them had income under $60,000. Taxable income is not necessarily the best measure of what someone earns because it excludes tax deductible expenses such as investment loan expenses and personal super tax deductions. Employer fringe benefits are also missing from taxable income. However, the key point from this data is that SMSFs have long been assumed to be a vehicle used by middle-aged higher income earners as they approach and head-off into retirement. This assumption doesn't hold anymore and clearly lower income earners who may also be younger investors are moving into SMSFs. All these investors will have their own reasons for setting up or joining an SMSF. In some respects it would be pointless to try to second guess their motives. Perhaps they're attracted to owning real estate bought using a loan. A conclusion that some commentators might make here is that many of these younger investors have insufficient super assets thereby making their SMSF expensive compared to larger APRA regulated funds. The so-called problem of low-asset SMSFs has been around for a long time but on the whole it's not a valid point. Jeremy Cooper's review elected not to mandate a minimum level of super assets before an SMSF could be used. There was good logic in this conclusion. Between June 2004 and June last year, the number of SMSFs grew from 280,000 to 475,000 -- an increase of almost 70 per cent. In June 2004, about 73,000 of these funds had less than $100,000 in total assets. By June last year, only 58,000 SMSFs were in this category. So while the number of funds grew strongly, the number of funds with a low level of assets was falling. At the other end of the scale the number of funds with more than $1 million in assets grew from 33,000 to 132,000 over the same period. These funds now make up over a quarter of all SMSFs. It's true that numbers of these funds increased dramatically because of the 2007 Howard government reforms to superannuation. For some super funds the impact of reduced asset values caused by the GFC will still be reflected in their total asset figures for June last year, which means that the net value of some SMSFs is still below their pre-GFC values. Nevertheless, over nine financial years the number of smaller asset funds has fallen and the number of larger asset funds has increased. The number of funds with assets of more than $500,000 has increased at a faster rate than the rate at which SMSFs have been set up between June 2004 and June last year. It's reasonable to conclude that investors are making the decision to set up their SMSF before it's technically viable from a cost perspective with a view to transferring existing super and new contributions into these funds over the first one to five years of the fund being set up. Tony Negline is author of The Essential SMSF Guide 2013-14.