The main argument for an SMSF is control — you choose exactly what your fund invests in. The main argument against is cost — SMSFs have fixed running costs that only make sense above a certain balance. This guide helps you understand when the SMSF vs industry fund comparison tips in each direction.
Running Costs — SMSF vs Industry Fund
SMSF Annual Costs
An SMSF’s running costs are largely fixed — they don’t scale down if the balance falls:
| Cost Item | Simple Fund | More Complex Fund |
|---|---|---|
| Accounting and tax return | $1,500 – $2,500 | $2,500 – $5,000+ |
| Annual audit | $300 – $600 | $600 – $1,500 |
| ATO supervisory levy | $259 | $259 |
| ASIC fee (corporate trustee) | $63 | $63 |
| Total (approximate) | $2,100 – $3,400 | $3,400 – $6,800+ |
More complex funds (those with property, an LRBA, crypto, or multiple members in different phases) attract higher accounting and audit fees.
Industry Fund Annual Costs
Industry funds charge a mix of administration fees and investment fees, typically expressed as a percentage of your balance:
| Fund | Admin Fee (approx.) | Investment Fee (approx.) | Total % |
|---|---|---|---|
| AustralianSuper Balanced | ~0.10% | ~0.53% | ~0.63% |
| Hostplus Balanced | ~0.08% | ~0.44% | ~0.52% |
| Aware Super Growth | ~0.10% | ~0.65% | ~0.75% |
| Australian Retirement Trust Balanced | ~0.10% | ~0.60% | ~0.70% |
Most industry funds also have a flat administration fee of $52–$78/year. For small balances, this flat fee dominates.
Break-Even Analysis
At what balance does an SMSF become cost-competitive with an industry fund?
Scenario: SMSF costs $3,000/year; industry fund charges 0.6%/year
| Balance | Industry Fund Fee | SMSF Cost | SMSF Cheaper? |
|---|---|---|---|
| $200,000 | $1,200 | $3,000 | No |
| $300,000 | $1,800 | $3,000 | No |
| $500,000 | $3,000 | $3,000 | Break-even |
| $750,000 | $4,500 | $3,000 | Yes |
| $1,000,000 | $6,000 | $3,000 | Yes |
With 6 members sharing the SMSF’s fixed costs: For a 6-member SMSF, the $3,000 annual cost is shared. At $100,000 per member ($600,000 total), the SMSF fee per member is $500 — much cheaper than industry fund fees on each individual balance. This is a key advantage of the 6-member limit introduced in July 2021.
General rule of thumb: A single-member SMSF typically makes sense from around $500,000. A 2-member SMSF may work from $300,000–$400,000 combined. A 6-member family SMSF can work at significantly lower individual balances.
What You Get With an SMSF That You Can’t Get With an Industry Fund
| Feature | Industry Fund | SMSF |
|---|---|---|
| Direct property investment | No | Yes |
| Physical gold and precious metals | No | Yes |
| Unlisted investments | Very limited | Yes (within rules) |
| Cryptocurrency | Very limited | Yes (within ATO rules) |
| Business real property (own your business premises in super) | No | Yes |
| Full control over asset allocation | Limited to offered options | Yes |
| Bespoke estate planning | Limited | Extensive |
| Multiple family members in one fund | No | Up to 6 members |
What You Give Up With an SMSF
| Feature | Industry Fund | SMSF |
|---|---|---|
| Compliance responsibility | Managed by the fund | You are legally responsible |
| Time and expertise required | Minimal | Significant |
| Annual administration | Automatic | Active management required |
| Insurance (default group cover) | Available with no underwriting | Must arrange separately |
| APRA oversight and supervision | Yes | No (ATO only) |
| APRA financial assistance scheme | Yes (if fund becomes insolvent) | No |
| Cost efficiency at small balances | High | Low |
The Insurance Consideration
This is frequently overlooked. Members of industry funds often have valuable default group life and TPD insurance — taken out without medical underwriting when they join. The group cover can be substantial and may not be available (or may require full underwriting) through an SMSF.
If you roll all your super into an SMSF and leave your industry fund, you lose that insurance. Before moving to an SMSF, assess:
- What insurance do you currently have in your industry fund?
- Can you replicate it through an SMSF insurance arrangement or a direct policy?
- Will underwriting be required, and do you have any health conditions that might affect cover?
Who Should Consider an SMSF?
May be worth considering if:
- Combined member balances are above $500,000 (single or 2-member) or above $300,000 per member (for larger family groups)
- You want to invest in direct property, unlisted assets, or specific ETFs not in your current fund’s menu
- You have a business and want to own the premises in super (business real property strategy)
- You want to co-invest as a family across multiple generations
- You are comfortable with, or can afford professional help with, compliance obligations
Probably not suitable if:
- Your balance is below $300,000–$400,000 with no plan to grow it significantly
- You want a simple, low-maintenance retirement savings vehicle
- You are not prepared to take on trustee responsibilities
- You would be the sole member with no plans to add others
Frequently Asked Questions
Can I transfer my existing super from an industry fund to an SMSF? Yes — once your SMSF is set up and registered with the ATO, you can roll over your existing balance from any super fund. However, check insurance implications carefully before rolling out of any fund.
Does an SMSF mean I can avoid paying the 15% tax on super earnings? No — an SMSF is taxed at the same concessional rates as any other super fund: 15% on contributions, 15% on earnings in accumulation phase, 0% in pension phase (subject to transfer balance cap limits). The tax rules are the same.
I’ve heard SMSFs perform worse than industry funds on average — is that true? APRA data has historically shown that many small SMSFs underperform comparable industry funds on a net-return basis. The fixed cost structure means low-balance SMSFs have a significant fee drag. However, well-run SMSFs with sufficient balances, diversified portfolios, and low-cost investments can match or exceed industry fund returns. Performance depends entirely on investment decisions.
See also: Self-Managed Super Funds. For advice tailored to your situation, speak with a licensed financial adviser who specialises in SMSFs. You can find one through the ASIC financial advisers register or MoneySmart.