Self-managed super funds now hold more than $1.1 trillion in assets, and how trustees invest that money is shifting as a younger cohort arrives. As at September 2026, listed shares remain the sector's single largest allocation, while newer funds are following a recognisable path: starting cash-heavy, then gradually diversifying. Understanding these patterns matters because allocation choices sit at the heart of every fund's Investment strategy.

Listed shares still lead the way

According to Australian Taxation Office data, listed shares account for around 27 per cent of total SMSF assets, making them the largest single allocation across the sector. Cash and term deposits sit at about 17 per cent, unlisted trusts at 13 per cent, non-residential (commercial) property at 11 per cent and listed trusts at 8 per cent.

The ATO's March 2026 Quarterly Report put listed shares at 26 per cent and cash and term deposits at 16 per cent, so the broad ranking is consistent across reporting periods.

Australian shares have long appealed to trustees who value franking credits and familiarity with locally listed companies, and they continue to form a core part of many portfolios.

The Diversification journey over a fund's life

One of the more instructive trends is not a single snapshot but how allocations mature over time. Research has tracked funds through their early years and found that cash levels typically fall after the first year or two as trustees settle in and diversify.

For funds established in FY2023, cash and term deposits fell from 33 per cent to 16 per cent by FY2025. Over the same window, the property allocation rose from 28 per cent to 35 per cent.

The pattern suggests many newer funds hold cash while they organise their strategy, then progressively deploy it into growth and income assets. Property, which often requires larger commitments and sometimes borrowing arrangements, tends to feature more heavily as funds mature rather than at establishment.

Where ETFs and younger trustees fit in

Exchange-traded funds have become a common building block for newer, younger trustees, who frequently favour shares and ETFs for the diversification and low cost they can offer. The appeal is understandable: a single ETF can provide exposure to hundreds of companies or an entire index.

Interestingly, this same accessibility can cut both ways. Some independent advisers have observed that trustees later find a retail platform can hold the same Assets more cheaply, which is one reason a portion of funds are eventually wound up. It is a reminder that the vehicle, not just the asset, affects overall cost.

Trustees weighing ETFs, direct shares or property may wish to consider how each fits their fund's documented investment strategy and their own circumstances.

Diversification remains a core obligation

Whatever the mix, trustees are required to prepare and regularly review an investment strategy that considers matters such as diversification, Liquidity and the fund's ability to pay benefits. The lifecycle data illustrates that a strategy is rarely static; allocations can and often do change as a fund grows and members' needs evolve.

The bigger picture

The SMSF investment landscape in 2026 shows continuity at the top, with listed shares dominant, alongside a clear evolution beneath the surface. Younger funds tend to begin with cash before diversifying into shares, ETFs and, over time, property. These are general trends drawn from available data rather than prescriptions. The appropriate allocation for any fund depends on individual circumstances, and professional advice may be appropriate before making significant changes.