SMSF investment options: what your fund can invest in

What counts as an SMSF investment option?

An SMSF investment option is any asset your fund is legally allowed to hold to build members' retirement savings. Before choosing any asset, the fund needs a written investment strategy that reflects the super rules — and every choice has to support members' retirement, not deliver a present-day benefit.

SMSFs are a large and growing part of Australia's super system. As at the ATO's March 2026 quarterly report, there were 672,805 SMSFs holding roughly $1.06 trillion in estimated assets across about 1.24 million members. That scale reflects one core appeal: control over exactly what the fund invests in. With that control comes responsibility — trustees must set and regularly review a strategy that considers risk and return, diversification, liquidity, the fund's ability to pay benefits, and members' insurance needs, as set out on the ATO's guidance for creating your SMSF investment strategy.

The main SMSF investment options

Here are the asset classes most SMSFs draw on, what role each typically plays, and the practical points to weigh up.

Cash and term deposits

Cash accounts and term deposits are the defensive, liquid foundation of most funds. They earn interest, are easy to value, and provide the liquidity a fund needs to pay expenses, tax and pensions. Across the sector, cash and term deposits made up roughly 16% of total estimated SMSF assets as at March 2026 — a meaningful buffer, though returns may not keep pace with inflation over the long term.

Australian shares

Direct Australian shares are the single largest allocation across the SMSF sector — around 26% of total estimated assets as at March 2026 — and it's easy to see why they suit self-directed trustees. Buying shares listed on the ASX or TMX Australia Exchange (formerly Cboe Australia) gives your fund direct exposure to local companies, potential capital growth and dividend income, often with franking credits attached.

For Australian-listed securities, ownership can be CHESS-sponsored, meaning the fund holds shares directly under its own Holder Identification Number (HIN) rather than through a pooled custodian. That direct, transparent ownership is a natural fit for the control an SMSF is built around. If the distinction is new to you, it's worth understanding CHESS sponsorship vs custodian ownership before you decide how to hold your fund's shares.

International and US shares

Holding only Australian assets concentrates your fund in one economy and currency. Adding international shares — including US shares and ETFs listed on the NYSE and Nasdaq — can broaden exposure to sectors that are under-represented on the ASX, such as global technology. International holdings carry currency risk alongside the usual market risk, so they're typically considered as one part of a diversified strategy rather than the whole.

ETFs

An ETF is a fund that trades on an exchange like a share and usually tracks an index, sector or theme. ETFs are popular with SMSFs — particularly newer trustees — because a single trade can give the fund broad, low-cost diversification across hundreds of companies or a whole asset class. They can cover Australian shares, global shares, bonds, property and more. If you're weighing them up, our guide to how ETFs work for beginners explains the mechanics, costs and risks.

Managed funds and LICs

Managed funds and listed investment companies (LICs) let your fund pool money with other investors and have it managed professionally. Managed funds are typically bought and sold at the fund's unit price, while LICs trade on the exchange like shares. Both can add professional management and diversification, usually in exchange for higher ongoing fees than a plain index ETF.

Property (listed and direct)

SMSFs can gain property exposure two ways. The simpler route is listed property — Australian real estate investment trusts (A-REITs) bought on the sharemarket — which is liquid and easy to value. The other is direct property, which many funds hold but which carries higher upfront costs, low liquidity, and strict rules. If a fund borrows to buy property, it must use a limited recourse borrowing arrangement (LRBA) that meets the ATO's conditions. From 10 August 2026, SMSFs can no longer enter new LRBAs to purchase residential property — only business real property qualifies for new borrowing arrangements. Existing LRBAs entered before that date are grandfathered and continue unchanged. Residential property generally can't be lived in or rented by members or their relatives.

Fixed income and bonds

Bonds and other fixed-income securities aim to provide steady income and stability to balance more volatile growth assets. SMSFs can access this exposure through exchange-traded bonds, bond ETFs or managed funds. Like cash, fixed income tends to play a defensive role in a portfolio.

Alternatives (crypto, precious metals, collectables)

SMSFs can also hold alternatives such as crypto assets, precious metals and collectables like art — but the conditions are strict. Collectables can't be used or stored by members and must be independently valued and insured. Crypto assets and private company shares are not "listed securities," which means, among other things, they can't be acquired from a related party. Alternatives should only be held where the investment strategy explicitly allows them and the sole purpose test is clearly met.

SMSF investment options at a glance

Roles and data as at September 2026; sector figures from the ATO March 2026 quarterly report.

Read more: shares vs ETFs: how to choose what's right for you

What your SMSF can't invest in (the ATO rules that shape your options)

Your options are shaped as much by what's not allowed as by what is. A few ATO rules do most of the heavy lifting, and breaching them can put the fund's concessional tax treatment at risk.

The sole purpose test (section 62 of the SIS Act) requires the fund to be maintained solely to provide retirement or death benefits to members and their beneficiaries — not a present-day benefit for anyone. That single principle sits behind almost every other restriction.

The related-party rules generally prevent your fund from acquiring assets from, or lending to, members or other related parties. There are narrow exceptions: listed securities and business real property can be acquired at market value, and certain in-house assets are permitted within limits.

The in-house asset rule caps in-house assets — broadly, loans to, investments in, or leases with a related party — at 5% of the fund's total assets, measured at market value. If your fund exceeds 5% at the end of a financial year, you must prepare a written plan to bring it back under 5% before the end of the following year. Borrowing is also tightly restricted and only permitted in specific circumstances. You can read the detail on the ATO's page covering SMSF investment restrictions.

As trustee, you are legally responsible for keeping the fund compliant with superannuation law. Because the rules interact with your personal circumstances, this is an area to work through with a registered tax agent or SMSF specialist rather than in isolation.

Building an SMSF investment strategy

An SMSF investment strategy is the written plan that decides how your fund's options fit together. It should set out how the fund's assets are allocated to meet members' retirement goals, and the ATO expects it to genuinely consider risk and expected return, diversification, liquidity, the fund's ability to pay benefits and expenses, and whether to hold insurance for members.

Diversification matters because putting most of a fund's savings into one asset or asset class creates concentration risk. A blend across defensive assets (cash, fixed income) and growth assets (shares, ETFs, property) is how many trustees manage that — there's no single "right" mix, and it should reflect the members' timeframe and risk tolerance. If you're thinking through the mix, our overview of ways to diversify a portfolio is a useful starting point.

A strategy isn't a set-and-forget document. It should be reviewed regularly and updated when circumstances change. It also helps to think about how new money goes to work: SMSFs receive contributions over time, and investing those contributions steadily into shares or ETFs — rather than trying to time the market — is one way trustees put a long-term plan into practice.

Learn more: Auto-Invest: set up recurring investments

How to invest your SMSF in shares and ETFs with Selfwealth

For the listed portion of an SMSF — Australian shares, ETFs, LICs and international shares — you need a trading account that suits a fund. Selfwealth by Syfe offers SMSF trading accounts that let your fund invest in over 1,800 ASX and TMX-listed shares and 270+ Australian ETFs, plus US shares and ETFs listed on the NYSE and Nasdaq.

Two things make this a practical fit for trustees focused on cost and control. First, brokerage is a flat $9.50 per trade on Australian and US markets, with no account-keeping fees — so the cost of a trade doesn't climb as the trade size grows. As a simple example, buying $5,000 of an ASX-listed ETF and buying $20,000 of the same ETF each cost $9.50 in brokerage. Second, Australian-listed holdings are CHESS-sponsored, so your fund holds them directly under its own HIN. Selfwealth also supports reporting and data feeds that help accountants and administrators with SMSF paperwork.

Fees, features and eligibility can change, so check the current details and the relevant terms before opening an account.

Learn more: SMSF trading accounts with Selfwealth

Frequently asked questions

What can an SMSF invest in? An SMSF can invest in cash and term deposits, Australian and international shares, ETFs, managed funds and LICs, listed and direct property, fixed income and bonds, and a limited set of alternatives such as crypto and precious metals. Every option must meet the sole purpose test and fit the fund's written investment strategy.

What is the most popular SMSF investment? Direct listed shares are the single largest asset class across the SMSF sector — around 26% of total estimated assets as at the ATO's March 2026 quarterly report — followed by cash and term deposits at roughly 16%. Popularity across the sector doesn't mean an asset is right for your fund; that depends on your strategy and circumstances.

Can an SMSF invest in ETFs? Yes. ETFs are a common SMSF holding because a single trade can provide broad, low-cost diversification across shares, bonds or property. As with any asset, the choice should sit within the fund's documented investment strategy.

Can my SMSF invest in property? Yes, either through listed property (A-REITs on the sharemarket) or direct property. Direct property involves higher costs, low liquidity and strict rules — including limited recourse borrowing arrangements if the fund borrows, and restrictions on related parties using or renting the property. Speak with an SMSF specialist before proceeding.

Does my SMSF need an investment strategy before investing? Yes. The ATO requires trustees to prepare a written investment strategy — considering risk and return, diversification, liquidity, the ability to pay benefits, and members' insurance needs — and to review it regularly. You must have one in place before the fund starts investing.