By Millinda Cobban, Associate Director, SMSFcentral
Last reviewed 12 August 2026. Figures current for the 2026-27 financial year.
Comparing an SMSF vs industry super fund usually turns into an argument about fees, which is a shame, because fees are only one of about six things that actually differ. Both are superannuation structures regulated under the Superannuation Industry (Supervision) Act 1993. The fundamental difference is that SMSF members are also the trustees and carry every decision and every obligation themselves, while industry fund members choose from options built and run by a professional trustee board. What follows sets out the differences as we see them from the administration side. It is not a recommendation either way, and it is not advice about which suits you.
Control
In an SMSF you and your co-trustees decide everything: the investment strategy, the asset allocation, when to buy and sell, which bank the fund uses, who prepares the accounts, how pensions are structured. Nobody makes those calls on your behalf.
In an industry fund the trustee board makes the investment decisions for all members, and you choose between pre-built options such as growth, balanced or conservative, or in some funds a limited direct investment menu. You do not control the underlying assets.
Whether that is an advantage depends entirely on whether you want the job. Control and responsibility arrive together, and there is no version of an SMSF where you keep one and delegate the other.
Investment flexibility
An SMSF can hold almost anything the SIS Act permits: Australian and international listed shares, direct property, managed funds, term deposits, cash, fixed interest, exchange-traded funds, unlisted assets, collectables subject to strict storage and insurance rules, and cryptocurrency. It can also borrow to acquire a single asset through a limited recourse borrowing arrangement, which adds both complexity and risk.
Industry funds offer diversified options and, in some cases, a member direct facility covering selected ASX-listed shares and term deposits. The range is narrower. Direct property, unlisted assets and alternative investments are generally not available.
Costs
This is where the comparison genuinely turns on your balance, because the two structures charge in fundamentally different shapes.
SMSF costs are largely fixed:
- Setup: $1,500 to $3,000 for the trust deed, corporate trustee registration where used, and ATO registration
- Annual administration and accounting: $2,000 to $5,000 depending on complexity
- Annual audit: $500 to $1,500
- ATO supervisory levy: $259 a year
- ASIC annual review fee: $70 a year for a special purpose corporate trustee
- Investment costs: brokerage, managed fund fees and property management as applicable
A straightforward fund lands between $3,000 and $7,000 a year before investment costs. Those costs barely move as the balance grows, which is the whole point.
Industry fund fees are mostly proportional:
- Administration fee: $50 to $100 a year plus 0.10% to 0.20% of the balance
- Investment fee: 0.40% to 0.80% of the balance depending on the option
- Insurance premiums deducted from the account, varying with age and cover
On a $200,000 balance in a typical balanced option that might total $1,200 to $2,000 a year. On $1 million it might be $6,000 to $10,000.
The crossover, where the fixed costs of an SMSF stop looking expensive on a per-dollar basis, generally falls somewhere between $200,000 and $500,000, depending on how complex the fund is and how the industry fund prices. The ATO has consistently noted that SMSFs below $200,000 tend to run higher expense ratios than APRA-regulated funds.
Insurance
Most industry funds provide default life and total and permanent disability cover, often without medical underwriting up to standard amounts, with premiums deducted from the account. Pooling across a large membership makes that cover cheaper than an equivalent individual policy in many cases.
An SMSF has no default cover. If members want life or TPD cover inside the fund, the trustee takes out a policy, which means individual underwriting and, frequently, higher premiums. Some trustees hold their cover outside super instead. For younger members with dependants this difference is often the most consequential item on the whole list, and it deserves more attention than it usually gets in a fee comparison.
The administrative load
An SMSF trustee has to prepare annual financial statements and a tax return, engage an approved SMSF auditor for the annual audit, maintain and review an investment strategy, keep records of every transaction and decision, lodge the annual return, comply with contribution caps, pension rules and in-house asset limits, and report transfer balance cap events to the ATO on time.
Most trustees engage an administrator for the work, and we do a good deal of it. What nobody can take on is the responsibility. If something goes wrong, the ATO looks to the trustee personally, which is a meaningful difference from being a member of an industry fund where the professional trustee carries the compliance risk and the member’s only real jobs are choosing an option and keeping a nomination current.
Estate planning
This difference is larger than most people realise, and it turns on a point of law rather than product design.
In an SMSF the trust deed governs binding death benefit nominations, not the superannuation regulations. The High Court held in Hill v Zuda Pty Ltd [2022] HCA 21 that regulation 6.17A does not apply to self managed super funds, so there is no statutory three-year lapse and no two-witness requirement unless the deed itself imposes them. A well-drafted deed can therefore support a non-lapsing nomination alongside reversionary pension nominations and distribution terms tailored to dependants and non-dependants. A poorly drafted one can support very little, so the deed is worth reading rather than assuming.
Industry funds are APRA-regulated, so regulation 6.17A does apply. A binding nomination generally lapses three years after signing and needs renewing, the trustee board retains discretion in some circumstances, and the available options are more standardised.
Where each tends to fit
Again without recommending either, an SMSF tends to be administratively practical where the balance is large enough to absorb fixed costs without dragging on returns, where the members are willing and able to meet trustee obligations with or without professional support, where they want investments an industry fund cannot offer, where estate planning flexibility matters, or where family members want to pool up to six accounts in one structure.
It tends to sit poorly where the balance is small enough that fixed costs bite, where nobody wants the trustee role, where default group insurance would be expensive to replicate, where a passive diversified approach is what the member actually wants, where members spend long periods overseas and residency under s17A becomes a live issue, or where a relationship breakdown or potential bankruptcy is in prospect and shared trusteeship would complicate matters.
The current picture
As at June 2024, the ATO reported approximately 610,000 SMSFs holding around $990 billion for more than 1.1 million members. The average balance was about $1.3 million and the median about $780,000, a gap that says a good deal about how skewed the sector is. Listed shares accounted for 26% of assets and cash and term deposits 17%. New establishments have run at roughly 25,000 to 30,000 a year, with a similar number winding up, so the total has stayed broadly flat.
Common questions
Is there a minimum balance?
Not in law. The ATO sets no minimum, though its own publications note that funds under $200,000 often carry uncompetitive expense ratios. Practical guidance tends to land between $200,000 and $500,000, and individual circumstances vary enough that the number matters less than the reason for having the fund.
Can I have both?
Yes. Nothing stops you being an SMSF member and holding an industry fund account at the same time, and some people keep a small industry fund account purely for the insurance while running an SMSF for the balance.
How long does it take to set one up?
Two to four weeks for a straightforward SMSF setup, covering the deed, the corporate trustee if used, ATO registration, ABN and TFN, the bank account and SuperStream.
Can I roll my industry fund balance into an SMSF?
Yes, and the rollover runs electronically through SuperStream. Check what insurance cover you would lose before you do, because reinstating it later means underwriting at your current age and health.
What if I want to close the fund later?
You can wind up at any time. It means paying out or rolling over benefits, final financial statements, a final audit, a final return and notifying the ATO, and it usually takes two to three months.
Is money safer in one than the other?
Both operate under the SIS Act, with APRA supervising industry funds and the ATO supervising SMSFs. Neither guarantees investment returns, and no government guarantee covers super fund investments in either structure. The real difference is who carries the compliance risk: a professional trustee in one case, you in the other.
If you want to understand the administration side
We deal with the day-to-day compliance and administration of SMSFs, which puts us in a reasonable position to tell you what running one actually involves, as distinct from what it costs. If that would help, call 02 8412 0086 or email [email protected].
This is general information only, not personal financial advice. SMSFcentral does not hold an Australian Financial Services Licence.