Highlights

  • An SMSF gives members greater control over how their retirement savings are invested.
  • From 10 August 2026, new SMSF borrowing arrangements for residential property are no longer available, while existing loans are grandfathered.
  • Commercial property may remain accessible through eligible Limited Recourse Borrowing Arrangements.
  • Shares, ETFs and term deposits can provide alternative ways to diversify an SMSF portfolio.

A Self-Managed Super Fund, commonly known as an SMSF, can give Australians greater control over where their retirement savings are invested. That flexibility can extend across shares, ETFs, term deposits and property, depending on the fund's strategy and applicable rules.

Recent changes to residential property borrowing have placed SMSFs back in focus. For people unfamiliar with the structure, however, the key question is not simply what an SMSF can invest in, but how it works and what responsibilities come with managing one.

What Is an SMSF?

An SMSF is a Superannuation fund managed by its members. Unlike an industry or retail super fund, where professional fund managers generally make Investment decisions, SMSF members are responsible for deciding how the fund's money is invested.

Depending on the fund's strategy, investments may include Australian and international shares, ETFs, cash, term deposits and eligible property.

The main attraction is control, but that control also brings administration, compliance and investment responsibilities.

Can an SMSF Invest in Property?

Property can form part of an SMSF investment strategy, but different rules apply depending on the type of property and how it is funded.

SMSFs have historically been able to use Limited Recourse Borrowing Arrangements, or LRBAs, to finance certain property purchases. Under this structure, borrowing is generally linked to a specific asset.

From 10 August 2026, SMSFs can no longer enter into new LRBAs to purchase residential property. Existing SMSF residential property loans are grandfathered, allowing current borrowers to continue under existing arrangements and remain eligible to refinance subject to the relevant requirements.

An SMSF may still be able to purchase residential property outright using existing fund money where permitted. However, buying property without borrowing can require a substantial fund balance.

Why Could Commercial Property Receive More Attention?

Commercial property may become a more prominent consideration because eligible SMSFs can still use LRBAs to borrow for commercial property.

Commercial property can include offices, warehouses, retail premises and other business-related real estate.

For SMSF members who want property exposure inside super, commercial property may therefore remain an alternative. However, it also carries risks such as vacancies, changing property values, ongoing costs and limited liquidity.

Property should not be considered in isolation. It needs to fit within the broader investment strategy and retirement objectives of the fund.

Where Do Shares and ETFs Fit?

Shares and ETFs provide another way for SMSFs to invest retirement savings.

Shares provide direct exposure to individual companies, while ETFs can provide exposure to a broader group of companies, sectors, markets or asset classes through a single listed investment.

Compared with property, listed investments may also offer greater Liquidity because they can generally be bought and sold more easily.

Research provided in the context suggests that shares and ETFs remain a common consideration among SMSF members looking to adjust their portfolios following changes to residential property borrowing.

What About Term Deposits?

Term deposits can play a different role within an SMSF.

They generally provide a fixed Interest Rate over an agreed period and may appeal to people who want greater certainty around part of their retirement savings.

However, term deposits usually offer different return characteristics from growth Assets such as shares or property. For some SMSFs, they may be used alongside other investments rather than as a complete investment strategy.

Why Is Diversification Important?

Concentrating most of an SMSF's money in a single property or investment can increase portfolio risk.

Diversification spreads retirement savings across different assets, potentially reducing dependence on the performance of one investment.

An SMSF portfolio may include a combination of shares, ETFs, property, cash and term deposits. The appropriate mix will depend on factors such as retirement goals, risk tolerance, available Capital and liquidity needs.

What Are the Risks of Running an SMSF?

Running an SMSF involves more than choosing investments. Trustees are responsible for administration, record keeping, annual audits, compliance and ensuring the fund operates for retirement purposes.

SMSFs can also involve accounting, administration and professional costs.

Liquidity is another consideration. A fund heavily invested in property may have less cash available for expenses or future retirement payments.

For this reason, an SMSF may not suit everyone, even where greater investment control appears attractive.

What to Watch

The changing treatment of residential property borrowing could influence how SMSF members allocate their retirement savings. Commercial property, shares, ETFs and term deposits may receive greater attention as members reassess how they want to maintain diversification and liquidity within their funds.

The important consideration remains whether each investment fits the fund's long-term retirement strategy rather than simply responding to short-term market or regulatory changes.