Most Australians have their super in an industry, retail, or corporate super fund — a professionally managed fund where investment and compliance decisions are handled on your behalf. A self-managed super fund (SMSF) is a private super fund you run yourself, with you (and up to five other members) acting as both members and trustees.
Both structures are legitimate ways to hold superannuation. The right choice depends on your balance, your financial knowledge, how much control you want, and how much time and cost you are prepared to commit to managing your retirement savings.
The Core Difference
| Regulated super fund (industry/retail) | SMSF | |
|---|---|---|
| Who manages it | Professional fund trustee | You (as trustee) |
| Who makes investment decisions | Fund investment team (or you choose an option) | You |
| Number of members | Millions | Up to 6 members |
| Annual running cost | Fees deducted from your account | ~$2,000–$5,000+ per year (accounting, audit, ASIC) |
| Regulatory oversight | APRA + ASIC | ATO |
| Setup time | Minutes (online application) | Weeks to months |
| Compliance burden | Minimal for members | Significant — trustees are personally responsible |
| Investment options | Fund’s menu of options | Broad: shares, property, managed funds, gold, crypto (within rules) |
Regulated Super Funds — Industry, Retail, and Corporate
Industry Funds
Industry super funds were originally established to serve workers in specific industries (construction, healthcare, hospitality, etc.) but most are now open to any Australian worker. They are run on a not-for-profit basis, meaning surpluses are returned to members rather than paid to shareholders.
Well-known industry funds include AustralianSuper, Aware Super, Hostplus, REST, Cbus, and UniSuper. Many have consistently delivered strong long-term returns and low fees.
Retail Funds
Retail funds are run by financial institutions (banks, insurance companies, wealth managers) and are structured as for-profit businesses. They typically offer a wider range of investment options and financial advice services. Fees have historically been higher than industry funds, though this gap has narrowed with competition.
Corporate Funds
Corporate super funds are set up by large employers exclusively for their employees. Most have been merged into larger industry or retail funds over the past decade.
What Regulated Funds Offer
- APRA oversight — all funds must meet prudential standards and pass the annual APRA performance test
- Default insurance — most funds include death and TPD cover automatically
- Low admin burden — employer contributions are sent directly, tax and compliance handled by the fund
- Diversification — your money is pooled and invested across hundreds of assets
- Government protections — including the Financial Claims Scheme for authorised deposit-taking institutions
Self-Managed Super Funds (SMSFs)
An SMSF is a super fund you establish and manage yourself. You are both a member and a trustee (or director of a corporate trustee). This means you are personally responsible for every compliance decision the fund makes.
SMSFs can have up to 6 members (increased from 4 on 1 July 2021). All members must be trustees (or directors of the corporate trustee). You cannot have an SMSF with a member who is not involved in running it.
What SMSFs Can Invest In
SMSFs have access to a much broader investment universe than most retail or industry funds:
- Australian and international shares (including direct share portfolios)
- Residential and commercial property (with significant restrictions on residential)
- Managed funds and ETFs
- Term deposits and bonds
- Collectibles (artwork, wine, coins) — subject to strict storage and insurance rules
- Cryptocurrency — allowed but must comply with the ATO’s requirements (fit investment strategy, arm’s length, sole purpose test)
- Business real property — your SMSF can purchase the commercial premises your business operates from (one of the most popular SMSF strategies)
SMSF Rules You Must Follow
As an SMSF trustee, you are responsible for complying with the Superannuation Industry (Supervision) Act 1993 (SIS Act). Key rules include:
- Sole purpose test — the fund must be maintained solely to provide retirement benefits to members (or death benefits to dependants). Mixing personal use with SMSF assets is a serious breach.
- Arm’s length rule — all SMSF transactions must be at market value, as if dealing with an unrelated party
- In-house asset rule — no more than 5% of SMSF assets can be invested in related parties
- Residential property — your SMSF cannot purchase a residential property from a related party, and members cannot live in it
- Annual audit — every SMSF must be audited by an approved SMSF auditor each year
- Annual tax return — lodged with the ATO each year
SMSF Running Costs
Running an SMSF is not cheap. Typical annual costs include:
| Cost | Approximate range |
|---|---|
| Accounting and tax return | $1,500–$3,000 |
| SMSF audit | $300–$700 |
| ASIC corporate trustee fee (if applicable) | ~$59/year |
| Investment costs (brokerage, managed fund fees) | Varies |
| Financial advice (optional) | Varies |
| Total | ~$2,000–$5,000+ per year |
Because these costs are largely fixed regardless of balance, SMSFs generally only become cost-competitive with large industry funds when your combined member balances are above approximately $200,000–$300,000. Below this level, the fees as a percentage of your balance can easily exceed what you would pay in a well-run industry fund.
Key Comparison: Which Is Right for You?
Consider a regulated fund (industry or retail) if:
- Your super balance is under $200,000
- You do not want the responsibility of managing investments and compliance
- You want to set and forget — employer contributions flow in automatically
- You value APRA oversight and the annual performance test as a quality backstop
- You want death and TPD insurance included by default
Consider an SMSF if:
- Your combined member balances are above $200,000–$300,000 (preferably higher)
- You want to invest in assets not available through retail or industry funds — particularly direct property or a direct share portfolio
- Your business owns commercial property and you want the SMSF to own the premises
- You are financially literate and prepared to spend time managing compliance
- You understand (or can afford professional help with) super law, tax, and investing
Risks of SMSFs
Running an SMSF comes with significant personal risk and responsibility:
- Trustee liability — as trustee, you are personally liable for the fund’s compliance. ATO penalties for breaches can be substantial.
- No APRA protection — SMSFs are regulated by the ATO, not APRA. There is no government guarantee if an SMSF fails or is subject to fraud.
- Time commitment — compliance, investment decisions, record-keeping, and annual reporting all require ongoing time investment.
- Concentration risk — many SMSF trustees hold a large proportion of their fund in a single property, which may not be appropriate.
- Scams — SMSFs are a common target for investment scams. The ATO and ASIC regularly warn about promoters who encourage people to set up an SMSF to invest in speculative schemes.
SMSF Setup Process (Overview)
Setting up an SMSF involves:
- Deciding on individual trustees vs a corporate trustee (corporate is generally recommended for flexibility and succession)
- Preparing a trust deed (must be done by a professional)
- Registering with the ATO and obtaining a TFN and ABN for the fund
- Opening a dedicated SMSF bank account
- Creating an Investment Strategy (a written document specifying how the fund invests, including diversification, liquidity, risk, and insurance)
- Rolling existing super balances into the fund
For full detail, see our guide on How to Set Up an SMSF.
Frequently Asked Questions
Can I move my super from an industry fund to an SMSF? Yes — you can roll over your existing super balance into a new SMSF at any time. Before doing so, check whether you will lose any insurance cover in your existing fund that you may not be able to replace.
Can I use an SMSF to buy a house to live in? No. Your SMSF cannot purchase a residential property for you or any related party to live in. Your SMSF can purchase commercial property used in a related party’s business (business real property), subject to rules. This is one of the most commonly misunderstood SMSF restrictions.
Do I need a financial adviser to run an SMSF? You are not legally required to use an adviser, but many SMSF trustees engage an accountant or SMSF specialist to help with compliance, tax, and strategy. Given the personal liability involved, professional assistance is generally advisable — particularly when setting up.
What is a corporate trustee and why does it matter? A corporate trustee is a company (Pty Ltd) that acts as trustee of the SMSF, rather than individual members acting as trustees directly. A corporate trustee is generally recommended because changing members is far easier (just update the company’s directors and ASIC records, rather than transferring all assets). With up to 6 members now allowed in an SMSF, the administration advantage of a corporate trustee is significant.
How is an SMSF taxed? An SMSF is taxed in the same way as other super funds: 15% on concessional contributions, 15% on investment earnings in accumulation phase (10% effective rate on long-term capital gains), and 0% on earnings in pension phase (with the Division 296 exception for balances over $3 million from 1 July 2025).
Related Guides
- What Is an SMSF?
- How to Set Up an SMSF
- How to Choose a Super Fund
- Superannuation Guide Australia (2026)
- ATO: Self-managed super funds
- ASIC MoneySmart: Self-managed super funds
This article provides general information comparing regulated super funds and SMSFs. It does not constitute financial or legal advice and does not take into account your personal circumstances. Managing an SMSF involves significant legal responsibilities. For advice tailored to your situation, speak with a licensed financial adviser or SMSF specialist. You can find one through the ASIC financial advisers register or MoneySmart.