Two very different Assets are shaping how newer self-managed super funds invest: commercial property and exchange-traded funds. One offers tangible bricks and mortar, the other cheap, diversified exposure to markets in a single trade. As younger Australians pour into the sector in 2026, the tug-of-war between the two is worth understanding — not as a verdict, but as a picture of where the money is going.

What the sector-wide numbers show

Across all SMSFs, listed shares are the biggest single allocation at 27% of assets, according to Australian Taxation Office data. Non-residential, or commercial, property sits at 11%. So at a headline level, listed investments comfortably outweigh direct property.

But the averages mask what is happening inside newer funds, where the balance looks different and is shifting quickly.

Property's growing role in younger funds

Research tracking funds established in FY2023 found the property allocation rose from 28% to 35% by FY2025, even as cash holdings fell. That points to a meaningful appetite for property among newer trustees once they move beyond an opening cash buffer.

Commercial property can appeal for its Diversification away from listed markets and, for some Business owners, the ability to hold premises within super. The trade-offs are well known: property is generally illiquid, harder to sell quickly, and can concentrate a fund's risk in a single, large, lumpy asset. Meeting pension payments or a Division 296 Liability from an asset that cannot be readily divided is a practical consideration.

Why ETFs appeal to newer trustees

At the other end sits the ETF. These are widely used by newer, younger trustees, who tend to hold shares and ETFs for broad market exposure at low cost. A single ETF can spread money across hundreds of companies or bonds, offering diversification that is difficult to achieve with one property.

Liquidity is a key contrast: listed investments can usually be bought and sold on any trading day, which can make managing Cash Flow and Rebalancing simpler. Costs are another. Some independent advisers have observed that trustees eventually find a retail platform can hold the same ETFs and shares more cheaply than an SMSF — one of the reasons a portion of funds are later wound up.

Weighing liquidity, diversification and cost

The comparison is less about which asset is superior and more about how each behaves. Property may offer diversification from shares and a tangible holding, but carries Liquidity and concentration risk and higher transaction costs. ETFs offer ready liquidity and instant diversification, but leave a fund exposed to market movements and, over time, ongoing platform and fund fees that some trustees find can be matched or beaten elsewhere.

Both sit within a broader duty. Trustees must maintain a documented Investment strategy that considers risk, return, diversification and liquidity, and must keep the fund's assets separate from personal money. A strategy weighted heavily towards a single property, for instance, may need to explain how the fund would meet benefit payments if that asset could not be sold quickly.

What trustees may wish to consider

New funds are clearly leaning into both property and listed investments as they diversify beyond early cash holdings. Neither path is right or wrong in the abstract; the suitable mix depends on a fund's members, timeframe, cash-flow needs and risk tolerance.

Trustees weighing property against ETFs, or any combination, may wish to consider the liquidity, concentration and cost implications carefully, and to seek appropriately qualified professional advice where required.