Exchange-traded funds (ETFs) have moved from being a niche option in self-managed super fund portfolios to a more established Investment choice for many trustees.

Data from Class’s 2026 Annual Benchmark Report shows ETFs accounting for around 7.2% of SMSF Assets on that platform, up by approximately one percentage point from the previous year. Around 35.5% of funds in the dataset held at least one ETF.

The figures suggest ETFs are becoming a more common tool for trustees seeking Diversification and simpler portfolio construction. However, the data reflects funds on the Class platform rather than the entire SMSF market, so it should be viewed as an indicator of broader trends rather than a complete industry measure.

What the numbers show

Within the Class dataset, ETFs have become one of the more common investment categories held by SMSFs.

Australian listed equities remain a significant allocation, accounting for around 26.4% of assets on the platform, while direct property represents approximately 21.1% and cash and term deposits around 15.1%.

Against this backdrop, ETFs at around 7.2% represent a growing but still smaller component of SMSF portfolios.

The trend indicates that some trustees are using ETFs alongside existing holdings rather than replacing traditional SMSF investments entirely.

Cost and simplicity

One reason for ETF adoption is the structure itself.

An ETF allows investors to gain exposure to a collection of securities through a single ASX-listed investment. Instead of purchasing many individual holdings separately, trustees can access a broader Market Segment through one transaction.

For SMSF trustees managing their own portfolios, this can simplify administration, reduce the number of individual transactions and make Portfolio Management more straightforward.

Many broad-market ETFs also have relatively low management fees compared with some actively managed investment products.

However, lower cost alone does not determine whether an investment is suitable. Trustees still need to consider whether the ETF aligns with the fund’s objectives, investment strategy and risk profile.

Diversification in a single trade

Diversification is another Factor contributing to ETF adoption.

Some SMSF portfolios have historically had significant exposure to Australian shares or concentrated holdings in a small number of companies. Others have substantial allocations to direct property.

ETFs can provide access to a wider range of securities, industries, regions and asset classes through a single investment.

For example, trustees may use ETFs to gain exposure to international markets, fixed income investments or specific sectors that may be difficult to access directly.

This can allow trustees to build a broader portfolio while maintaining control over their overall investment approach.

The international tilt

ETF adoption among SMSFs has also been supported by Demand for international investment exposure.

Benchmark data indicates that many popular ETF holdings provide exposure to overseas equities rather than only Australian markets.

This suggests some trustees are using ETFs to reduce concentration in domestic markets and gain access to global companies, sectors and regions.

For SMSFs that already hold Australian shares directly, international ETFs can provide another way to broaden exposure without requiring trustees to manage overseas trading accounts or individual foreign investments.

Limitations to keep in view

While ETFs can provide diversification, they are not without risks.

A broad Equity ETF remains exposed to market movements, and narrow sector or thematic ETFs may behave differently from diversified market products.

Some ETFs may use specialised structures, Leverage or focus on specific industries, meaning trustees need to understand what the product actually owns before investing.

Trustees should consider factors including:

  • underlying holdings;
  • fees and costs;
  • investment structure;
  • liquidity;
  • how the ETF fits within the SMSF investment strategy.

Popularity among other SMSFs does not automatically make an ETF suitable for every fund.

How trustees are using ETFs in practice

Many trustees use ETFs as part of a broader portfolio approach.

An ETF may form the diversified foundation of a portfolio, while direct shares, property or other investments provide additional exposure based on the trustees’ objectives.

This type of approach allows trustees to combine broad market exposure with specific investment choices.

ETFs can also make portfolio adjustments simpler because changing exposure may require fewer transactions compared with buying or selling multiple individual securities.

However, administration requirements remain. Trustees still need to manage distributions, taxation records, franking credits and foreign income reporting where relevant.

Practical takeaway

ETFs have become a more established feature of SMSF portfolios by offering accessible diversification and listed market exposure.

The growth in ETF adoption reflects changing Trustee preferences, particularly around global exposure and portfolio simplicity.

However, the appropriate role of an ETF depends on each fund’s circumstances, investment strategy, Risk tolerance and objectives. Trustees should assess each investment on its own merits rather than relying only on broader market trends.